What changed in this filing

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Item 1. Business

2022-02-22 compared with 2021-02-22 · 82 added, 56 removed, 402 unchanged (26% of the section changed)

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Our core businesses focus on the design, engineering and manufacture of precision naval nuclear components, reactors and nuclear fuel for the U.S.

We also provide special nuclear materials processing, environmental site restoration services, and a variety of products and services to customers in the nuclear power industry, as well as critical medical radioisotopes and radiopharmaceuticals.

We also provide special nuclear materials processing, environmental site restoration services, products and services to customers in the nuclear power industry, critical medical radioisotopes and radiopharmaceuticals and other advanced nuclear technologies.

While we provide a wide range of products and services, our business segments are heavily focused on major projects.

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Nuclear Operations Group, Nuclear Power Group and Nuclear Services Group.

For financial information regarding each of our segments and financial information regarding geographic areas, see Note 15 to our consolidated financial statements included in this Report.

For further details regarding each segment's facilities, see Item 2, "Properties." In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our revenues.

For financial information regarding each of our segments and financial information regarding geographic areas, see Note 15 and Note 3 to our consolidated financial statements included in this Report.

For further details regarding each segment's facilities, see Item 2 of this Report.

In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our revenues.

We are currently exploring growth strategies across our segments through strategic investments and acquisitions to expand and complement our existing businesses.

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In addition, the U.S.

Navy issued its fiscal year 2022 long-range shipbuilding plan in December 2020, which maintains recommendations made in its fiscal year 2020 long-range shipbuilding plan (released in September 2019) to increase the size of its fleet of ships to include additional submarines and aircraft carriers beyond the number disclosed prior to September 2019.

While the new Administration may make further changes with its fiscal year 2022 budget submission, we have made additional capital expenditures and investments in personnel to meet this anticipated growth in demand and we expect to continue making such expenditures and investments.

Navy issued its fiscal year 2022 long-range shipbuilding plan in June 2021, which maintains previous recommendations to increase the size of its fleet of ships to include additional submarines and aircraft carriers.

While the current presidential administration may make further changes with its fiscal year 2023 budget submission, we have made

additional capital expenditures and investments in personnel to meet this anticipated growth in demand and we expect to continue making such expenditures and investments.

Nuclear Power Group

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On January 2, 2020, our subsidiary BWXT Canada Ltd.

acquired Laker Energy Products Ltd.

("Laker Energy Products").

Laker Energy Products is a global supplier of nuclear-grade materials and precisely machined components for CANDU nuclear power utilities and employs approximately 140 personnel.

Laker Energy Products is reported as part of our Nuclear Power Group segment.

Nordion Medical Isotope Business

On July 30, 2018, our subsidiary BWXT ITG Canada, Inc.

acquired the Nordion medical isotope business (the "MI business").

The MI business is a leading global manufacturer and supplier of critical medical radioisotopes and radiopharmaceuticals for research, diagnostic and therapeutic uses.

Its customers include radiopharmaceutical companies, hospitals and radiopharmacies.

Its primary operations are located in Kanata, Ontario, Canada and Vancouver, British Columbia, Canada.

This acquisition added approximately 150 highly trained and experienced personnel, two specialized production centers and a uniquely licensed infrastructure.

In addition to the growing portfolio of radioisotope products we acquired, the MI business will be the platform from which we plan to launch our Molybdenum-99 product line and a number of future radioisotope-based imaging, diagnostic and therapeutic products.

This business is reported as part of our Nuclear Power Group segment.

acquired Laker Energy Products Ltd., which was renamed BWXT Precision Manufacturing Inc.

("Precision Manufacturing").

Precision Manufacturing is a global supplier of nuclear-grade materials and precisely machined components for CANDU nuclear power utilities and is reported as part of our Nuclear Power Group segment.

See Note 2 to our consolidated financial statements included in this Report for additional information on acquisitions.

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In the event of a contract deferral or cancellation, we generally would be entitled to recover costs incurred, settlement expenses and profit on work completed prior to deferral or termination.

Significant or numerous cancellations could adversely affect our business, financial condition, results of operations and cash flows.

Significant or numerous contract cancellations could adversely affect our business, financial condition, results of operations and cash flows.

Nuclear Operations Group

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Fees can be established in terms of dollar value or percentage of costs.

Award and incentive fees are determined and earned based on customer evaluation of our performance against negotiated criteria, primarily related to cost, and are intended to provide motivation for excellence in contract performance.

Award and incentive fees are determined and earned based on customer evaluation of our performance against negotiated criteria, primarily

related to cost, and are intended to provide motivation for excellence in contract performance.

Incentive fees that are based on cost provide for an initially negotiated fee to be adjusted later, typically using a formula to measure performance against the associated criteria, based on the relationship of total allowable costs to total target costs.

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This segment also serves customers of our advanced technology platforms primarily through the use of fixed-price contracts that are awarded following a competitive bid process.

Fixed-price contracts entail more risk to us because the price

has been pre-determined and is generally not subject to adjustment, regardless of costs incurred, unless authorized by the customer.

Fixed-price contracts entail more risk to us because the price has been pre-determined and is generally not subject to adjustment, regardless of costs incurred, unless authorized by the customer.

Backlog represents the dollar amount of revenue we expect to recognize in the future from contracts awarded and in progress.

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Government was $4,198.7 million, $121.8 million of which had not yet been funded.

As of December 31, 2020, our Nuclear Power Group segment had no backlog with the U.S.

As of December 31, 2021, our Nuclear Services Group segment's backlog with the U.S.

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Government are subject to these annual funding approvals, the total values of the underlying programs are significantly larger.

In 2019, we received awards from the U.S.

Government with a combined value in excess of $3.9 billion, inclusive of unexercised options, approximately $3.4 billion of which had been added to backlog as of December 31, 2020.

The value of unexercised options excluded from backlog as of December 31, 2020 was approximately $0.5 billion, which is expected to be exercised through 2025, subject to annual Congressional appropriations.

In March 2021, we received awards from the U.S.

Government with a combined value of $2.2 billion, inclusive of unexercised options, all of which had been added to backlog as of December 31, 2021.

The value of unexercised options excluded from backlog as of December 31, 2021, including previous awards, was approximately $0.4 billion, a portion of which is expected to be awarded annually through 2024, subject to annual Congressional appropriations.

The competitive environments in which each segment operates are described below.

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Our Nuclear Power Group segment supplies heavy nuclear components, specialized engineering and maintenance services, nuclear fuel, fuel handling systems and tooling delivery systems for CANDU reactors.

This segment competes with a number of companies specializing in nuclear capabilities including, but not limited to, Framatome, Cameco Corporation, Doosan Heavy Industries & Construction Co., Ltd., E.S.

competes with a number of companies specializing in nuclear capabilities including, but not limited to, Framatome, Cameco Corporation, Doosan Heavy Industries & Construction Co., Ltd., E.S.

Fox Limited, AECON Group Inc., Bechtel National, Inc., Westinghouse Electric Corporation and SNC-Lavalin Group, Inc.

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The objective of this program is to achieve closure of the Savannah River Site liquid waste tanks in compliance with the Federal Facilities Agreement, utilizing the Defense Waste Processing Facility and Saltstone Facility.

This contract is scheduled to be replaced by the Savannah River Integrated Mission Completion contract, which was awarded to another BWXT joint venture in October 2021, as described below.

• Savannah River Integrated Mission Completion Contract.

In October 2021, Savannah River Mission Completion LLC, a limited liability company formed by BWXT TSG, Amentum and Fluor Federal Services, Inc.

was awarded a contract to reduce environmental and financial liabilities for the DOE at the Savannah River Site located in Aiken, South Carolina.

Notice to Proceed was granted on November 23, 2021, with contract turnover expected to occur during the first quarter of 2022.

• Portsmouth Gaseous Diffusion Plant D&D.

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Human Capital Management

People Strong, Innovation Driven .

Our employees are responsible for providing safe and effective nuclear solutions for global security, clean energy, environmental restoration, nuclear medicine and space exploration.

Through their hard work and innovation, we have developed new technologies that benefit our customers, build our business and enhance our lives.

Our goal is to be the employer of choice within our industry and the communities in which we operate.

We focus on maintaining a solid pipeline of talent throughout our organization and continually developing the capabilities and skills needed for the future of our business.

We strive to maintain a highly-skilled and diverse workforce where employees are recruited, compensated, retained and promoted based on their performance and contribution to the Company.

At December 31, 2021, we employed approximately 6,600 persons worldwide, predominantly in the U.S.

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We consider our relationships with our employees to be satisfactory.

Employee Compensation and Benefits .

Our compensation plans are designed to reward our employees for achieving and exceeding objectives that create long-term value for shareholders.

The success and growth of our business is attributable to our ability to attract, develop, and retain talented and high-performing employees at all levels in our Company.

Our compensation programs are designed to ensure we have the ability to attract, retain, and motivate employees to achieve our objectives.

Providing comprehensive, competitive, and affordable retirement, health and other benefits is also important to our attraction and retention strategy.

We offer health benefits which include various medical/pharmacy plan options, health savings accounts for those in high deductible health plans, and flexible spending accounts for both health care and dependent care are also available to employees.

We also offer retirement, investment, and tax savings/deferral opportunities to our employees.

Employee Development .

The professional development of our employees is critical to our success.

We offer online and in-person professional development, training and other programs, as well as mentoring programs, to enhance the knowledge, skills and advancement opportunities for our employees.

To further our employee development goals, we partner with a number of education institutions for accredited, vocational and other programs and provide tuition reimbursement to employees pursuing job-related, careering enhancing courses.

We offer leadership development programs for employees identified with high potential for promotion to leadership roles.

We established the BWXT Technical Fellow program which honors and celebrates some of our most talented employees for their contributions to driving innovation and inspiring creativity.

Our Technical Fellows offer a breadth of knowledge and diversity of technical expertise that can be focused on developing creative solutions to numerous challenges we face in our industry.

Diversity and Inclusion .

We value the diversity of our employees and are committed to providing an engaging and inclusive atmosphere for all employees that promotes productivity and encourages creativity and innovation.

We strive to maintain a highly-skilled and diverse workforce where employees are hired, retained, compensated and promoted based on their performance and contribution to the Company.

Employee Development and Retention .

The attraction, development and retention of our employees is a key focus for our Company.

We offer online and in-person training programs to enhance the knowledge, skills and advancement opportunities for our employees.

Our goal is to be the employer of choice within our industry and the communities in which we operate.

We focus on maintaining a solid pipeline of talent throughout our organization and continually developing the capabilities and skills needed for the future of our business.

Work Environment .

We believe that maintaining a work environment that recognizes effort and teamwork, values mutual respect and open communication, and demonstrates care and concern for our employees is essential to an engaged and productive workforce.

In furtherance of this objective, we provide regular Code of Business Conduct training for our employees to identify and prevent misconduct and report situations that violate our policies and/or negatively impact our work environment.

We investigate and take prompt action to correct conduct that is inconsistent with our Code of Business Conduct and other policies.

In 2018, we formed a Diversity and Inclusion ("D&I") Committee comprised of a rotating group of employees representing various job functions, levels and backgrounds.

The D&I Committee works to identify and implement changes to promote awareness and foster a culture of diversity and inclusion throughout the workforce.

In addition, we participate in numerous conferences and career fairs each year that focus on diversity, including those hosted by the National Society of Black Engineers, the Society of Women Engineers and the Society of Hispanic Professional Engineers.

Health and Safety .

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As such, we are committed to maintaining the highest safety, security, ethical and environmental standards.

We maintain comprehensive safety programs focused on identifying risks and eliminating hazards that could lead to serious injuries.

We further provide our employees upfront and ongoing safety training to ensure that safety policies and procedures are effectively communicated and implemented.

We take pride in the fact that we operate NRC Category 1 and Canadian Nuclear Safety Commission ("CNSC") licensed facilities and have instilled as a core value a culture that prioritizes safety with a vision of zero accidents at these and all of our work locations.

In pursuit of an injury-free workplace, we constantly monitor and assess all injuries and "near misses" for any lessons we can learn and leverage to reduce the risk inherent in occupational activities.

We use this information to further develop our safety program in an effort to prevent future occupational and environmental incidents to help us achieve our safety goals.

During 2020, as an essential business we implemented safety protocols and new procedures to protect our employees and contractors in response to the novel strain of coronavirus ("COVID-19") pandemic.

These protocols included complying with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

For a detailed discussion of the impact of the COVID-19 pandemic, see "COVID-19 Assessment" in Item 7 of this Report.

We provide regular safety training to our employees and conduct safety culture surveys to identify employee concerns.

We use this information to further develop our safety program in an effort to prevent future occupational and environmental incidents.

Ethics and Integrity .

We believe that maintaining a work environment that recognizes effort and teamwork, values mutual respect and open communication, and demonstrates care and concern for our employees' well-being is essential to retaining an engaged and productive workforce.

Our Code of Business Conduct ("Code") establishes the principles and standards that we expect our employees to follow.

Each officer, director and employee is required to use good ethical judgment when conducting business;

be respectful of colleagues, business partners, customers and others in their interactions;

and comply with applicable laws, rules, and regulations.

The Code describes what is appropriate behavior and guides ethical business decisions that maintain a commitment to integrity.

In furtherance of this objective, we provide regular training on the Code for our employees to identify and prevent misconduct, and the Code requires that employees report situations that violate our policies and/or negatively impact our work environment.

In addition, we maintain the BWXT Ethics Helpline to allow employees to report any concerns relating to ethics or other concerns confidentially and, if they choose, anonymously.

We investigate and take prompt action to correct conduct that is inconsistent with our Code and other policies.

In 2020, we implemented safety protocols and new procedures to protect our employees and contractors in response to the novel strain of coronavirus ("COVID-19").

These protocols included complying with social distancing and other

health and safety standards as required by federal, state and local government agencies and taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities.

In 2021, we provided opportunities for our employees to receive COVID-19 vaccination both on-site and at sponsored clinics at no cost.

For a detailed discussion of the impact of COVID-19, see "COVID-19 Assessment" in Item 7 of this Report.

Patents and Technology Licenses

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We charge the costs of research and development unrelated to specific contracts as incurred.

Excluding customer-sponsored research and development, the majority of our activities in this area for the years ended December 31, 2020, 2019 and 2018 related to the development of technologies in the area of medical and industrial radioisotopes and additive and autonomous manufacturing.

Excluding customer-sponsored research and development, the majority of our activities in this area for the years ended December 31, 2021, 2020 and 2019 related to the development of technologies in the area of medical and industrial radioisotopes, additive and autonomous manufacturing and advanced reactors.

Contractual arrangements for customer-sponsored research and development can vary on a case-by-case basis and include contracts, cooperative agreements and grants.

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Insurers frequently react to market losses by ceasing to write or severely limiting coverage for certain exposures.

Risks that we have frequently found difficult to cost-effectively insure against include, but are not limited to, property losses from wind, flood and earthquake events, nuclear hazards and war, pollution liability, liabilities related to occupational health exposures (including asbestos), liability related to our executives, professional liability/errors and omissions coverage, the failure, misuse or unavailability of our information technology systems, the failure of security measures designed to protect our information technology systems from security breaches and liability related to risk of loss of our work in progress.

our work in progress.

In cases where we purchase insurance, we are subject to the creditworthiness of the relevant insurer(s), the available limits of the coverage, our retention under the relevant policy, exclusions in the policy and gaps in coverage.

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These risks may be considerable in any given year or cumulatively.

Our insurance subsidiary does not provide insurance to unrelated parties.

Our insurance subsidiary does not provide

insurance to unrelated parties.

Claims as a result of our operations could adversely impact the ability of our insurance subsidiary to respond to all claims presented.

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These laws and regulations include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and similar laws that provide for responses to, and liability for, releases of hazardous substances into the environment.

These laws and regulations also include similar foreign, state or local counterparts to these federal laws, which regulate air emissions, water discharges, hazardous substances and waste and require public disclosure related to the use of various hazardous substances.

and regulations also include similar foreign, state or local counterparts to these federal laws, which regulate air emissions, water discharges, hazardous substances and waste and require public disclosure related to the use of various hazardous substances.

Our operations are also governed by laws and regulations relating to workplace safety and worker health, including the U.S.

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In 2002, Congress directed the U.S.

the Formerly Utilized Sites Remedial Action Program Sites with NRC-Licensed Facilities, dated July 5, 2001 (the "MOU").

Army Corps of Engineers ("Army Corps") to clean up radioactive waste at the Shallow Land Disposal Area located in Parks Township, Armstrong County, Pennsylvania (the "SLDA"), consistent with the Memorandum of Understanding between the Nuclear Regulatory Commission and the United States Army Corps of Engineers for Coordination on Cleanup and Decommissioning of the Formerly Utilized Sites Remedial Action Program Sites with NRC-Licensed Facilities, dated July 5, 2001 (the "MOU").

From 1961 to 1970, the SLDA was operated by the Nuclear Materials and Equipment Corporation ("NUMEC") pursuant to Atomic Energy Commission ("AEC") License SNM-145.

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Although this ARCO indemnity would cover claims by the Army Corps to seek recovery from BWXT for SLDA cleanup costs, no assurance can be given that this indemnity will be available or sufficient in the event such claims are asserted.

For additional discussion of environmental matters, see "Note 10 – Commitments and Contingencies" to our consolidated financial statements included in this Report.

For additional discussion of environmental matters, see Note 10 to our consolidated financial statements included in this Report.

We perform significant amounts of work for the U.S.

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Environmental Protection Agency and the NRC.

We are also involved in manufacturing activities at licensed facilities in Canada that are also subject to continuing reviews by governmental agencies in Canada, including the CNSC.

We are also involved in manufacturing activities at licensed facilities in Canada that are subject to continuing reviews by governmental agencies in Canada, including the CNSC.

The NRC's decommissioning regulations require our Nuclear Operations Group segment to provide financial assurance that it will be able to pay the expected cost of decommissioning its two licensed facilities at the end of their service lives.

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From time to time, our management or persons acting on our behalf make forward-looking statements to inform existing and potential security holders about our Company.

Statements and assumptions regarding expectations and projections of specific projects, our future backlog, revenues, income and capital spending, strategic investments, acquisitions or divestitures, return of capital activities, margin improvement initiatives or impacts of the COVID-19 pandemic are examples of forward-looking statements.

Statements and assumptions regarding expectations and projections of specific projects, our future backlog, revenues, income and capital spending, strategic investments, acquisitions or divestitures, return of capital activities, margin improvement initiatives or impacts of COVID-19 are examples of forward-looking statements.

Forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "plan," "seek," "goal," "could," "intend," "may," "should" or other words that convey the uncertainty of future events or outcomes.

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Statements in this Report, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements.

Those forward-looking statements appear in Item 1 – "Business" and Item 3 – "Legal Proceedings" in Part I of this Report, in Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations" and in the notes to our consolidated financial statements in Item 8 of Part II of this Report and elsewhere in this Report.

We have based our forward-looking statements on information currently available to us and our current expectations, estimates and projections about our industries and our Company.

Those forward-looking statements appear in Item 1, Item 3, Item 7 and in the notes to our consolidated financial statements in Item 8 of this Report and elsewhere in this Report.

We have based our forward-looking statements on information currently available to us and our current expectations, estimates and projections about our industries, business environment and our Company.

We caution that these statements are not guarantees of future performance, and you should not rely unduly on them as they involve risks, uncertainties and assumptions that we cannot predict.

In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate.

For example, the extent to which the COVID-19 outbreak will continue to impact our business will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the length and severity of the COVID-19 health crisis, and the actions to contain its impact, in addition to the potential recurrence or subsequent waves or strains of COVID-19 or similar diseases.

While our management considers these statements and assumptions to be reasonable, they are inherently subject to numerous factors, including potentially the risk factors described in the section labeled Item 1A, "Risk Factors" of this Report, most of which are difficult to predict and many of which are beyond our control.

For example, the extent to which COVID-19 will continue to impact our business will depend on future developments that are highly uncertain and cannot be predicted, including the length and severity of the COVID-19 health crisis, the potential recurrence of COVID-19, subsequent waves or strains or the development of similar diseases, the actions to contain the impact of such diseases and potential responses to such actions by our suppliers, contractors and employees.

While our management considers these statements and assumptions to be reasonable, they are inherently subject to numerous factors, including potentially the risk factors described in the section labeled Item 1A of this Report, most of which are difficult to predict and many of which are beyond our control.

Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements.

We have discussed many of these factors in more detail elsewhere in this Report, including under the heading "COVID-19 Assessment" in Item 7 – "Management's Discussion and Analysis of Financial Condition and Results of Operations" of Part II of this Report.

We have discussed many of these factors in more detail elsewhere in this Report, including under the heading "COVID-19 Assessment" in Item 7 of this Report.

These factors are not necessarily all the factors that could affect us.

Unpredictable or unanticipated factors we have not discussed in this Report could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements.

We do not intend to update or review any forward-looking statement or our description of important factors, whether as a result of new information, future events or otherwise, except as required by applicable laws.

We do not intend to update or review any forward-

looking statement or our description of important factors, whether as a result of new information, future events or otherwise, except as required by applicable laws.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business