What changed in this filing

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Item 1. Business

2023-02-23 compared with 2022-02-22 · 158 added, 153 removed, 331 unchanged (48% of the section changed)

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At any given time, a relatively small number of projects can represent a significant part of our operations.

On June 30, 2015, we completed the spin-off of our former Power Generation business (the "spin-off") into an independent, publicly traded company named Babcock & Wilcox Enterprises, Inc.

We have presented the notes to our consolidated financial statements on the basis of continuing operations, unless otherwise stated.

Business Segments

We operate in three reportable segments:

We operate in two reportable segments:

Government Operations and Commercial Operations.

Our reportable segments reflect changes we made during the first quarter of 2022 to better align our businesses by their government and commercial nature, which reflects the manner in which our operating segment information is reported for purposes of assessing operating performance and allocating resources.

Prior to 2022, we reported three segments:

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

Our Government Operations segment consists of our legacy Nuclear Operations Group and Nuclear Services Group segments with certain research and development activities in the areas of advanced reactors and advanced manufacturing.

Our Commercial Operations segment consists of our legacy Nuclear Power Group segment with certain research and development and commercialization activities in the areas of medical and industrial radioisotopes and radiopharmaceuticals.

Both segments now include research and development and certain commercialization activities associated with new technologies previously reported outside of our reportable segments.

The change in our reportable segments had no impact on our previously reported consolidated results of operations, financial condition or cash flows.

We have applied the change in reportable segments to previously reported historical financial information and related disclosures included in this Report.

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.

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We would expect to fund these opportunities with cash generated from operations or by raising additional capital through debt, equity or some combination thereof.

Nuclear Operations Group

Government Operations

Through this segment, we engineer, design and manufacture precision naval nuclear components, reactors and nuclear fuel for the U.S.

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In addition, we perform fabrication activities for missile launch tubes for U.S.

Navy submarines.

Our Nuclear Operations Group segment specializes in the design and manufacture of close-tolerance and high-quality equipment for nuclear applications.

Navy submarines and supply proprietary and sole-source valves, manifolds and fittings to global naval and commercial shipping customers.

Our Government Operations segment specializes in the design and manufacture of close-tolerance and high-quality equipment for nuclear applications.

In addition, we are a leading manufacturer of critical nuclear components, fuels and assemblies for government and limited other uses.

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We expect that orders for nuclear components will continue to be a significant part of backlog for the foreseeable future.

In addition, the U.S.

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

In April 2022, the U.S.

Navy issued its 30-year shipbuilding plan containing three alternative procurement profiles based upon varied funding assumptions.

All three indicate growth in the total number of ships and a sustained, or increased, procurement profile for nuclear-powered submarines and aircraft carriers.

While the current presidential administration may make further changes with its fiscal year 2024 budget submission, we have made additional capital expenditures and investments in personnel to meet the current demand requirements and we expect to continue making such expenditures and investments.

This segment also provides various services to the U.S.

Government by managing and operating high-consequence operations at U.S.

nuclear weapons sites, national laboratories and manufacturing complexes.

The revenues and equity in income of investees under these types of contracts are largely a function of spending by the U.S.

Government and the performance scores we and our consortium partners earn in managing and operating these sites.

With our specialized capabilities of full life-cycle management of special materials, facilities and technologies, we believe this segment is well-positioned to continue participating in the ongoing cleanup, operation and management of critical government-owned nuclear sites, laboratories and manufacturing complexes maintained by the DOE, NASA and other federal agencies.

The Government Operations segment is also a leader in the development of advanced nuclear reactors for a variety of power and propulsion applications in the space and terrestrial domains.

Government customers for these applications include NASA, the U.S.

Department of Defense ("DoD") and the DOE.

We offer complete advanced nuclear fuel and reactor design and engineering, licensing, and manufacturing services for these programs.

Commercial Operations

Through this segment, we design and manufacture commercial nuclear steam generators, heat exchangers, pressure vessels, reactor components and other auxiliary equipment, including containers for the storage of spent nuclear fuel and other high-level nuclear waste.

We have supplied the nuclear industry with more than 1,300 large, heavy components worldwide and we are the only commercial heavy nuclear component manufacturer in North America.

We have supplied the nuclear industry with more than 1,300 large, heavy components worldwide and are the only commercial heavy nuclear component manufacturer in North America.

This segment is also a leading supplier of nuclear fuel, fuel handling systems, tooling delivery systems, nuclear-grade materials and precisely machined components, and related services for CANDU nuclear power plants.

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Our in-depth knowledge comes from over 50 years of experience in the design, manufacturing, commissioning and service of nuclear power generation equipment.

Additionally, this segment is a leading global manufacturer and supplier of critical medical radioisotopes and radiopharmaceuticals.

The Nuclear Power Group segment specializes in performing full-scope, prototype design work coupled with manufacturing integration.

Our Commercial Operations segment specializes in performing full-scope, prototype design work coupled with manufacturing integration.

This segment's capabilities include:

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• thermal-hydraulic design of reactor plant components;

• in-plant inspection, maintenance and modification services;

• nuclear component modification and replacement;

• commercial nuclear fuel manufacturing and design;

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• metallographic and chemical analysis.

• manufacture and supply of critical medical radioisotopes and radiopharmaceuticals for research, diagnostic and therapeutic uses.

Our Nuclear Power Group segment's overall activity primarily depends on the demand and competitiveness of nuclear energy.

A significant portion of our Nuclear Power Group segment's operations depends on the timing of maintenance outages, principally in the Canadian market, and the cyclical nature of capital expenditures and major refurbishments for nuclear utility customers, which could cause variability in our financial results.

Nuclear Services Group

Through this segment, we provide various services to the U.S.

Government, including special nuclear materials processing, environmental site restoration services and management and operating services for various U.S.

Government-owned facilities.

These services are provided primarily to the DOE, including the NNSA, the Office of Nuclear Energy, the Office of Science and the Office of Environmental Management, and NASA.

This segment's principal operations include:

• managing and operating environmental management sites;

• managing spent nuclear fuel and transuranic waste for the DOE;

• managing and operating nuclear production facilities;

• providing critical skills and resources for DOE sites;

• managing and operating space flight hardware and test facilities for NASA.

This segment also develops technology for a variety of applications, including advanced nuclear power sources, and offers complete advanced nuclear fuel and reactor design and engineering, licensing and manufacturing services for new advanced nuclear reactors.

Our Nuclear Services Group segment's overall activity depends primarily on authorized spending levels of the DOE, including the NNSA, the Office of Nuclear Energy, the Office of Science and the Office of Environmental Management, and NASA.

We manage and operate complex, high-consequence nuclear and national security operations for the DOE and the NNSA, primarily through our joint ventures, as further discussed under the caption "Joint Ventures" below.

Divestiture of U.S.-Based Commercial Nuclear Services Business

On May 29, 2020, our subsidiary BWXT Nuclear Energy, Inc.

divested its U.S.-based commercial nuclear services business, a component of our Nuclear Services Group segment.

In a cashless transaction, we exchanged net assets totaling $18.0 million, consisting primarily of property, plant and equipment and certain warranty obligations, for a manufacturing facility and the associated land of approximately the same value.

The acquired assets are reported as part of the Nuclear Services Group segment.

Laker Energy Products Ltd.

This segment also manufactures and supplies products for diagnostic imaging and radiotherapeutic treatments.

It is also a partner for contract development and manufacturing services for life science and pharmaceutical companies.

Among its offerings is the manufacture of medical radioisotopes, radiopharmaceuticals and medical devices, as well as partnerships with life science and pharmaceutical companies developing new drugs.

Our Commercial Operations segment's overall activity primarily depends on the demand and competitiveness of nuclear energy and the demand for critical medical radioisotopes and radiopharmaceuticals.

A significant portion of our Commercial Operations segment's operations depends on the timing of maintenance outages and the cyclical nature of capital expenditures and major refurbishments for nuclear utility customers, principally in the Canadian market, which could cause variability in our financial results.

Acquisitions and Divestitures

Acquisition of Dynamic Controls Limited and Citadel Capital Corporation

On April 11, 2022, our subsidiary BWXT Government Group, Inc.

acquired all of the outstanding stock of U.K.-based Dynamic Controls Limited ("Dynamic") and U.S.-based Citadel Capital Corporation, along with its wholly-owned subsidiary, Cunico Corporation ("Cunico").

Dynamic and Cunico are suppliers of highly-engineered, proprietary valves, manifolds and fittings for global naval nuclear and diesel-electric submarines, surface warfare ships and commercial shipping vessels.

These companies are reported as part of our Government Operations segment.

Acquisition of Laker Energy Products Ltd.

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

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("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.

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 Commercial Operations segment.

Divestiture of U.S.-Based Commercial Nuclear Services Business

On May 29, 2020, our subsidiary BWXT Nuclear Energy, Inc.

divested its U.S.-based commercial nuclear services business, a component of our Government Operations segment.

The acquired assets are reported as part of the Government Operations segment.

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

We execute our contracts through a variety of methods, including fixed-price incentive fee, cost-plus, cost-reimbursable, firm fixed-price or some combination of these methods.

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Most of our long-term contracts have provisions for progress payments.

We attempt to cover anticipated increases in labor, material and service costs of our long-term contracts either through an estimate of such changes, which is reflected in the original price, or through risk-sharing mechanisms, such as escalation or price adjustments for items such as labor and commodity prices.

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

Nuclear Operations Group

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 cancellation.

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

Government Operations

The majority of the revenue generated by this segment is from long-term contracts with the U.S.

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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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Government has an exclusive right to negotiate a mutually acceptable purchase of the facility.

Nuclear Power Group

Contracts in this segment are usually awarded through a competitive bid process.

Factors that customers may consider include price, plant or equipment availability, technical capabilities of equipment and personnel, efficiency, safety record and reputation.

Certain of these contracts are fixed-price contracts in which the specified scope of work is agreed to for a pre-determined price that is generally not subject to adjustment, regardless of costs incurred by the contractor, unless changes in scope are authorized by the customer.

Fixed-price contracts entail more risk to us because they require us to predetermine both the quantities of work to be performed and the costs associated with executing the work.

Remaining contracts are primarily time-and-materials contracts, which result in us recovering costs incurred in accordance with the contract plus a fee.

Our arrangements with customers may require us to provide letters of credit, bid and performance bonds or guarantees to secure bids or performance under contracts, which may involve significant amounts for contract security.

Nuclear Services Group

This segment's principal operations include the management and operation of nuclear production facilities, environmental management sites and the management of spent nuclear fuel and transuranic waste for the DOE.

Our Government Operations segment also enters into contracts that include the management and operation of nuclear production facilities, environmental management sites and the management of spent nuclear fuel and transuranic waste for the U.S.

Government, primarily the DOE.

These activities are primarily accomplished through our participation in joint ventures with other contractors as further discussed under the caption "Joint Ventures" below.

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These contracts are generally structured as five-year contracts with options for up to five additional years, which are exercisable by the customer, or include provisions whereby the contract durations can be extended as a result of the achievement of certain performance metrics.

These are generally cost-reimbursement contracts that include an award fee that is primarily based on annual performance, with monthly provisional fee payments and annual true-up payments.

These are generally cost-reimbursable contracts that include an award fee that is primarily based on annual performance, with monthly provisional fee payments and annual true-up payments.

Depending on the type of contract, the contractor may be required to supply working capital, which is reimbursed by the U.S.

Government through regular invoicing.

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.

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, primarily in the early design and development phases of the underlying program.

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.

We expect to transition these programs to cost-reimbursable contracts which will minimize our overall risk as the underlying projects increase in scale.

Commercial Operations

Contracts in this segment are usually awarded through a competitive bid process.

Factors that customers may consider include price, plant or equipment availability, technical capabilities of equipment and personnel, efficiency, safety record and reputation.

Fixed-price contracts entail more risk to us because they require us to predetermine both the quantities of work to be performed and the costs associated with executing the work.

Remaining contracts are primarily time-and-materials contracts, under which the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials.

Our profit may vary under time-and-materials contracts if actual labor-hour rates vary significantly from the negotiated rates.

Additionally, because time-and-materials contracts can provide little or no fee for managing material costs, the content mix can have an impact on profitability.

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

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We are subject to the budgetary and appropriations cycle of the U.S.

Government as it relates to our Nuclear Operations Group and Nuclear Services Group segments.

Government as it relates to our Government Operations segment.

Backlog may not be indicative of future operating results, and projects in our backlog may be cancelled, modified or otherwise altered by customers.

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(In approximate millions)

Nuclear Operations Group $ 4,511 87 % $ 3,659 83 %

Nuclear Power Group 644 12 % 726 16 %

Nuclear Services Group 21 1 % 21 1 %

Government Operations $ 3,515 85 % $ 4,532 88 %

Commercial Operations 629 15 % 644 12 %

Total Backlog $ 4,144 100 % $ 5,176 100 %

We do not include the value of our unconsolidated joint venture contracts in backlog.

These unconsolidated joint ventures are included in our Nuclear Services Group segment.

These unconsolidated joint ventures are included in our Government Operations segment.

See Note 4 to our consolidated financial statements included in this Report for financial information on our equity method investments.

Of the backlog at December 31, 2021, we expect to recognize revenues as follows:

2022 2023 Thereafter Total

(In approximate millions)

Nuclear Operations Group $ 1,573 $ 1,102 $ 1,836 $ 4,511

Nuclear Power Group 260 142 242 644

Nuclear Services Group 21 — — 21

Total Backlog $ 1,854 $ 1,244 $ 2,078 $ 5,176

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

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

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

Government was $20.6 million, all of which has been funded.

At December 31, 2022, our ending backlog was $4,144.3 million, which included $88.7 million of unfunded backlog related to U.S.

Government contracts.

We expect to recognize approximately 42% of the revenue associated with our backlog by the end of 2023, with the remainder to be recognized thereafter.

Major new awards from the U.S.

Government are typically received following Congressional approval of the budget for the U.S.

Government are typically received following Congressional approval of appropriations for the U.S.

Government's next fiscal year, which starts October 1, and may not be awarded to us before the end of the calendar year.

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

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 value of unexercised options excluded from backlog as of December 31, 2022 was approximately $200 million, which is expected to be awarded in annual installments through 2024, subject to annual Congressional appropriations.

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

Nuclear Operations Group.

Government Operations

We have specialized technical capabilities that have allowed us to be a valued supplier of nuclear components and fuel for the U.S.

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Because of the technical and regulatory standards required to meet U.S.

Government contracting requirements for nuclear components and fuel and the barriers to entry present in this type of environment, competition in this segment is limited.

The primary bases of limited competition for this segment are price, high capital investment, technical capabilities, high regulatory licensing costs and quality of products and services.

Government contracting requirements for nuclear components and fuel and the barriers to entry present in this type of environment, competition is limited.

The primary bases of limited competition are price, high capital investment, technical capabilities, high regulatory licensing costs and quality of products and services.

In addition, significant portions of the designs, processing and final product are classified by the U.S.

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Government security clearances.

Nuclear Power Group.

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.

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.

The primary bases of competition for this segment are price, technical capabilities, quality, timeliness of performance, breadth of products and services and willingness to accept project risks.

Nuclear Services Group.

Through this segment, we are engaged in the management and operation of U.S.

This segment also engages in the management and operation of U.S.

Government facilities and the delivery of environmental remediation services (decontamination and decommissioning) associated with U.S.

Government-owned nuclear facilities.

Many of our government contracts are bid as a joint venture with one or more companies, in which we have a majority or a minority position.

The performance of the prime or lead contractor can impact our reputation and our future competitive position with respect to that particular project and customer.

Many of our government contracts in this area are bid as a joint venture with one or more companies, in which we have a majority or a minority position.

The performance of our joint venture partners can impact our reputation and our future competitive position with respect to that particular project and customer.

Our primary competitors in the delivery of goods and services to the U.S.

Government and the operation of U.S.

Government facilities include, but are not limited to, Bechtel National, Inc., Amentum, Fluor Corporation, Lockheed Martin Corporation, Jacobs Engineering Group, Inc., Northrop Grumman Corporation, Huntington Ingalls Industries, Inc., Honeywell International, Inc.

and Leidos, Inc.

Government facilities include, but are not limited to, Bechtel National, Inc., Amentum, Fluor Corporation, Jacobs Engineering Group, Inc., Northrop Grumman Corporation, Huntington Ingalls Industries, Inc., Honeywell International, Inc., Leidos, Inc., Westinghouse Electric Corporation and Atkins (a member of SNC-Lavalin Group, Inc.).

The primary bases of competition for this segment are experience, past performance, availability of key personnel and technical capabilities.

Commercial Operations

Our Commercial Operations 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.

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

The primary bases of competition for this segment are price, technical capabilities, quality, timeliness of performance, breadth of products and services and willingness to accept project risks.

This segment also manufactures medical radioisotopes, radiopharmaceuticals and medical devices, and partners with life science and pharmaceutical companies developing new drugs.

This segment competes with a number of nuclear medicine companies which include, but are not limited to, Curium, Lantheus Holdings, Inc.

and Jubilant DraxImage Inc.

The primary bases of competition in this area are quality, distribution capabilities, price and reliability.

Joint Ventures

We share in the ownership of a variety of entities with third parties, primarily through corporations, limited liability companies and partnerships, which we refer to as "joint ventures." Through these joint venture arrangements, our Nuclear Services Group segment primarily manages and operates nuclear facilities and associated plant infrastructure, constructs large capital facilities, provides safeguards and security for inventory and assets, supports and conducts research and development for advanced energy technology and manages environmental programs for the DOE, the NNSA and NASA.

We share in the ownership of a variety of entities with third parties, primarily through corporations, limited liability companies and partnerships, which we refer to as "joint ventures." Through these joint venture arrangements, our Government Operations segment primarily manages and operates nuclear facilities and associated plant infrastructure, constructs large capital facilities, provides safeguards and security for inventory and assets, supports and conducts research and development for advanced energy technology and manages environmental programs for the DOE, the NNSA and NASA.

We generally account for our investments in joint ventures under the equity method of accounting.

Certain of our Nuclear Services Group segment unconsolidated joint ventures are described below.

Certain of our Government Operations segment unconsolidated joint ventures are described below.

• Los Alamos Legacy Cleanup Contract.

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and BWXT TSG, became the liquid waste contractor for the DOE's Savannah River Site located in Aiken, South Carolina.

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.

This contract ended in February 2022 and was 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.

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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.

This contract began on February 27, 2022, the primary objective of which is to receive, store, treat and dispose of radioactive liquid waste.

• Portsmouth Gaseous Diffusion Plant D&D.

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and BWXT TSG to provide nuclear operations, decontamination and decommissioning services at the Portsmouth Gaseous Diffusion Plant in Portsmouth, Ohio.

A request for proposal was issued by the DOE in 2022 as a follow on to this contract.

An award is expected in the first half of 2023.

• West Valley Demonstration Project Phase I Decommissioning and Facility Disposition.

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Nuclear Waste Partnership, LLC is a limited liability company formed by Amentum, BWXT TSG and Areva Federal Services, LLC as the major subcontractor that manages and operates the DOE's Waste Isolation Pilot Plant in Carlsbad, New Mexico.

A follow on contract was awarded by the DOE to a competitor in the fourth quarter of 2022.

Transition to the new contractor was completed in February 2023.

• Synergy Achieving Consolidated Operations & Maintenance (SACOM).

Syncom Space Services, LLC is a limited liability company formed by PAE Applied Technologies, LLC and BWXT Nuclear Operations Group, Inc.

Syncom Space Services, LLC is a limited liability company formed by PAE Applied Technologies, LLC (acquired by Amentum in 2022) and BWXT Nuclear Operations Group, Inc.

to provide facility operations and maintenance services for institutional and technical facilities, and perform test and manufacturing support services at two NASA facilities – the Stennis Space Center in Hancock County, Mississippi and the Michoud Assembly Facility in New Orleans, Louisiana.

• Paducah Gaseous Diffusion Plant Deactivation and Remediation Project.

Four Rivers Nuclear Partnership, LLC is a limited liability company formed by BWXT TSG, CH2M Hill Constructors, Inc.

and Fluor Federal Services, Inc.

Four Rivers Nuclear Partnership, LLC is a limited liability company formed by CH2M Hill Constructors, Inc., BWXT TSG and Fluor Federal Services, Inc.

to provide nuclear operations, deactivation and remediation services at the Paducah Gaseous Diffusion Plant in Paducah, Kentucky.

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Government, utilities and other customers in the nuclear power and radiopharmaceutical industries.

Our largest customer during the years ended December 31, 2021, 2020 and 2019 was the U.S.

Government, representing approximately 76%, 77% and 77% of our total consolidated revenues, respectively.

Our largest and primary customer of our Government Operations segment is the U.S.

During the years ended December 31, 2022, 2021 and 2020, the U.S.

Government represented approximately 76%, 76% and 77% of our total consolidated revenues, respectively.

No individual non-U.S.

Government customer accounted for more than 10% of our consolidated revenues in the years ended December 31, 2022, 2021 or 2020.

Government is the primary customer of our Nuclear Operations Group and Nuclear Services Group segments.

Revenues from U.S.

Government contracts comprised 94%, 94% and 96% of revenues in our Nuclear Operations Group segment for the years ended December 31, 2021, 2020 and 2019, respectively.

Revenues from U.S.

Government contracts comprised 98%, 87% and 85% of revenues in our Nuclear Services Group segment for the years ended December 31, 2021, 2020 and 2019, respectively.

Raw Materials and Suppliers

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Although shortages of some raw materials have existed occasionally, no serious shortage exists at the present time.

Our Nuclear Operations Group segment relies on several single-source suppliers for materials used in its products.

We believe these suppliers are reliable, and we and the U.S.

Government expend significant effort to monitor and maintain the supplier base for our Nuclear Operations Group segment.

Our Nuclear Power Group and Nuclear Services Group segments do not depend on single sources of supply for materials used in their products.

We have limited supply options for certain raw materials used in our Nuclear Power Group segment;

Our Government Operations and Commercial Operations segments rely on a limited number of suppliers, including single-source suppliers, for certain materials used in its products;

however, we believe the suppliers of these materials are reliable.

Additionally, we and the U.S.

Government expend significant effort to monitor and maintain the supplier base for our Government Operations segment.

Human Capital Management

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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.

Through their hard work, dedication 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.

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(5,600 employees) and Canada (1,400 employees).

Many of our operations are subject to union contracts, which we customarily renew periodically.

Many of our operations are subject to union contracts, which we customarily negotiate periodically.

At December 31, 2022, approximately 2,000 of our employees were members of labor unions.

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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.

Our compensation programs are designed to ensure we remain competitive relative to the markets in which we operate;

provide meaningful value to employees and those they care for;

incentivize the short- and long-term success of BWXT and its stakeholders through programs with consistent performance measures throughout the organization;

and recognize employees who make outstanding contributions to the organization.

Providing comprehensive, competitive, and affordable retirement, health, income protection and other benefits is also central 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.

Our income protection plans provide coverage for employees in the event of an unexpected illness or injury.

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

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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 offer online and in-person professional development and training, 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 educational institutions for accredited, vocational and technical upskilling programs.

We provide tuition reimbursement to employees pursuing job-related, career enhancing courses and provide full tuition grants for the completion of undergraduate and graduate degree programs through an accredited university partner.

For employees identified with high potential for promotion to leadership roles, we routinely offer leadership development programs focused on preparing future leaders for their next career steps.

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 .

Diversity, Equity 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.

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.

We maintain 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.

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 and the Society of Women Engineers.

Health and Safety

The safety of our employees is critical to our success as a specialty manufacturer of nuclear components and an operator of high-consequence nuclear and national security facilities for the U.S.

The safety of our employees is critical to our success as a specialty manufacturer of nuclear fuel, nuclear components, nuclear medicine products and an operator of high-consequence nuclear and national security facilities for the U.S.

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.

We maintain comprehensive safety programs focused on identifying risks and eliminating hazards that could lead to personnel injuries or environmental impacts.

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

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 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.

In addition to providing regular

safety training to our employees, we routinely conduct safety culture surveys to identify employee concerns.

We use this information to further improve our safety culture and programs in an effort to prevent future occupational and environmental incidents.

Ethics and Integrity

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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, 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.

Excluding customer-sponsored research and development, the majority of our activities in this area for the years ended December 31, 2022, 2021 and 2020 related to the development of technologies in the area of medical and industrial radioisotopes, radiopharmaceuticals, additive and autonomous manufacturing and advanced reactors.

Contractual arrangements for customer-sponsored research and development can vary and include contracts, cost-sharing arrangements, cooperative agreements and grants.

See Note 1 to our consolidated financial statements included in this Report for further information on research and development.

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We primarily seek to do this through contractual protections, including waivers of consequential damages, indemnities, caps on liability, liquidated damages provisions and access to the insurance of other parties.

We also procure insurance, operate our own captive insurance company and/or establish funded or unfunded reserves.

We also procure insurance, operate our own captive insurance company or establish funded and/or unfunded reserves.

However, none of these methods will eliminate all risks.

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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.

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), 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.

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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Accordingly, indemnification protections and the possibility of exclusions under Canada's NLCA are similar to those under the Price-Anderson Act in the U.S.

We supply commercial nuclear equipment and services to certain customers in countries other than the U.S.

Our Commercial Operations Segment supplies commercial nuclear equipment and services to certain customers in countries other than the U.S.

and Canada that are party to international treaties and in countries that are not signatory to international treaties but have their own nuclear liability laws that, in general, have regulations in place whereby nuclear operators are solely liable for nuclear damage claims, which would exclude nuclear suppliers from any such exposure.

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Although we do not own or operate any nuclear reactors, we have some coverage under commercially available nuclear liability and property insurance for our facilities that are currently licensed to possess special nuclear materials.

Substantially all of our Nuclear Operations Group segment contracts involving nuclear materials are covered by and subject to the nuclear indemnity provisions of either the Price-Anderson Act or Public Law 85-804, which, among other things, authorizes the DOE to indemnify certain contractors when such acts would facilitate national defense.

Substantially all of our Government Operations segment contracts involving nuclear materials are covered by and subject to the nuclear indemnity provisions of either the Price-Anderson Act or Public Law 85-804, which, among other things, authorizes the DOE to indemnify certain contractors when such acts would facilitate national defense.

However, to the extent the value of the nuclear materials in our care, custody or control exceeds the commercially available limits of our insurance, we potentially have underinsured risk of loss for such nuclear material.

Our Nuclear Services Group segment participates in the management and operation of various U.S.

Our Government Operations segment participates in the management and operation of various U.S.

Government facilities.

This participation is customarily accomplished through the participation in joint ventures with other contractors for any given facility.

This participation is customarily accomplished through the participation in joint ventures with other contractors for

any given facility.

These activities involve, among other things, handling nuclear devices and their components.

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Government is also conditional, and provisions of the relevant contract or applicable law may preclude reimbursement.

Our wholly owned captive insurance subsidiary provides primary workers' compensation, employer's liability, commercial general liability and automotive liability insurance to support our operations.

Our wholly owned captive insurance subsidiary provides primary workers' compensation, employer's liability, commercial general liability, automotive liability and property insurance to support our operations.

Liabilities include provisions for estimated losses incurred but not reported (“IBNR”), as well as estimated provisions for known claims.

IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions.

Reserve estimates are adjusted in future periods as actual losses differ from experience.

Through our insurance subsidiary, we also have reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention.

Receivables for reinsurance coverage are recognized when realization is deemed probable.

We may also have business reasons in the future to have our insurance subsidiary accept other risks that we cannot or do not wish to transfer to outside insurance companies.

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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Although we are not aware of any significant, unresolved claims against our subsidiaries and former subsidiaries that are not subject to the channeling injunction and that relate to the periods during which such excess insurance coverage related, with the contribution of these insurance rights to the asbestos personal injury trust, it is possible that we could have underinsured or uninsured exposure for non-derivative asbestos claims or other personal injury or other claims that would have been insured under these coverages had the insurance rights not been contributed to the asbestos personal injury trust.

On June 30, 2015, we completed the spin-off of our former Power Generation business (the "spin-off") into an independent, publicly traded company named Babcock & Wilcox Enterprises, Inc.

In conjunction with the spin-off, claims and liabilities associated with the asbestos personal injury, property damage and indirect property damage claims mentioned above have been expressly assumed by BWE pursuant to the master separation agreement between us and BWE.

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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.

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.

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.

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.

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").

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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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.

We provided financial assurance totaling $61.8 million during the years ended December 31, 2021 and 2020 with surety bonds for the ultimate decommissioning of these licensed facilities.

The NRC's decommissioning regulations require our Government Operations 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.

We provided financial assurance totaling $68.1 million and $61.8 million during the years ended December 31, 2022 and 2021, respectively, with surety bonds for the ultimate decommissioning of these licensed facilities.

These facilities have provisions in their government contracts pursuant to which substantially all of our decommissioning costs and financial assurance obligations are covered by the DOE, including the costs to complete the decommissioning projects underway at the facility in Erwin, Tennessee.

The surety bonds noted above are to cover decommissioning required pursuant to work not subject to this DOE obligation.

In Canada, the CNSC's decommissioning regulations require our Nuclear Power Group segment to provide financial assurance that it will be able to pay the expected cost of decommissioning its CNSC-licensed facilities at the end of their service lives.

In Canada, the CNSC's decommissioning regulations require our Commercial Operations segment to provide financial assurance that it will be able to pay the expected cost of decommissioning its CNSC-licensed facilities at the end of their service lives.

We provided financial assurance totaling $43.3 million and $46.4 million during the years ended December 31, 2022 and 2021, respectively, with letters of credit and surety bonds for the ultimate decommissioning of these licensed facilities.

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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 COVID-19 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 or margin improvement initiatives 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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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 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 of this Report.

We have discussed many of these factors in more detail elsewhere in 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