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Item 7. Management’s Discussion and Analysis

2023-02-23 compared with 2022-02-22 · 131 added, 127 removed, 239 unchanged (52% of the section changed)

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

We operate in three reportable segments:

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

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

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

We expect the backlog of our Nuclear Operations Group segment of approximately $4,511 million at December 31, 2021 to produce revenues of approximately $1,573 million in 2022, not including any change orders or new contracts that may be awarded during the year.

The revenues of our Nuclear Operations Group segment are largely a function of defense spending by the U.S.

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 financial condition, results of operations or cash flows.

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

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.

Government Operations

The revenues of our Government Operations segment are largely a function of national security spending by the U.S.

As a supplier of major nuclear components for certain U.S.

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We believe many of our programs are well-aligned with national defense and other strategic priorities as we supply high-end equipment for submarines and aircraft carriers for the U.S.

Navy and participate in the continuing cleanup, operation and management of critical government-owned nuclear sites, laboratories and manufacturing complexes maintained by the DOE, NASA and other federal agencies.

However, it is possible that reductions in federal government spending could have an adverse impact on the operating results and cash flows of this segment in the future.

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

We expect the backlog of our Nuclear Power Group segment of approximately $644 million at December 31, 2021 to produce revenues of approximately $260 million in 2022, not including any change orders or new contracts that may be awarded during the year.

The revenues in this segment primarily depend on the demand and competitiveness of nuclear energy.

The activity of this segment depends on the timing of maintenance and refueling outages, the cyclical nature of capital expenditures and major refurbishment and plant life extension projects, as well as the demand for nuclear fuel and fuel handling equipment primarily in the Canadian market, which could cause variability in our financial results.

Our Nuclear Power Group segment's offerings also include medical radioisotope products, radiopharmaceuticals and medical devices for use in diagnostic imaging and therapeutic treatments.

The medical isotope 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.

Nuclear Services Group

A significant portion of this segment's operations is conducted through joint ventures, which typically earn fees, and we account for them following the equity method of accounting.

A portion of this segment's operations is also conducted through joint ventures, which typically earn fees, and we account for them following the equity method of accounting.

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

As a result, this segment reports minimal backlog and revenues.

Given our specialized capabilities of full life-cycle management of special materials, facilities and technologies, we believe our Nuclear Services Group segment is well-positioned to participate in the continuing cleanup, operation and management of critical government-owned nuclear sites, laboratories and manufacturing complexes maintained by the DOE, NASA and other federal agencies.

However, it is possible that reductions in federal government spending could have an adverse impact on the operating results and cash flows of this segment in the future.

This segment also specializes in the development of advanced technologies.

The nature, timing and duration of any related contracts are dependent on the demand and funding availability for such technologies.

Commercial Operations

The revenues in this segment primarily depend on the demand and competitiveness of nuclear energy.

Our Commercial Operations segment's offerings also include medical radioisotope products, radiopharmaceuticals and medical devices for use in diagnostic imaging and radiotherapeutic treatments.

The medical isotope 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.

Critical Accounting Estimates

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If a current estimate of total contract costs indicates a loss on a contract, the projected loss is recognized in full when determined.

It is possible that current estimates could materially change for various reasons, including, but not limited to, fluctuations in forecasted labor productivity or steel and other raw material prices.

It is possible that current estimates could materially change for various reasons, including, but not limited to, fluctuations in forecasted labor productivity or raw material prices.

We routinely review estimates related to our contracts, and revisions to profitability are reflected in the quarterly and annual earnings we report.

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Government contracts.

For the years ended December 31, 2021, 2020 and 2019, our CAS

pension costs attributed to U.S.

For the years ended December 31, 2022, 2021 and 2020, our CAS pension costs attributed to U.S.

Government contracts totaled $11.7 million, $29.0 million and $43.6 million, respectively.

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Government is obligated to pay substantially all the decommissioning costs.

COVID-19 Assessment

We continue to monitor COVID-19 and its impacts and potential impacts on our business.

We have received notifications from the U.S.

and Canadian governments designating BWXT as an essential business given our roles in national security, energy production and medical manufacturing.

We continue to operate our facilities and have taken numerous precautions to mitigate exposure and protect the health and well-being of our workforce, including arranging for the vaccination of our workforce, where possible.

To date, we have experienced localized and episodic operational challenges as a result of employee illness, quarantines and social distancing protocols.

Because developments related to the spread of COVID-19 and its impacts continue to change, it is difficult to predict any future impact at this time.

We have experienced, and may experience further, disruptions to demand for certain of our products and services and our operations in the future as a result of, among other things, national, state, provincial or local government enforced quarantines, vaccine mandates and related labor issues, worker illness, absenteeism or attrition, supply chain disruptions and travel and other restrictions.

For similar reasons, COVID-19 may also adversely impact

our supply chain and other manufacturers, which could delay our receipt of essential goods and services.

Any number of these potential risks could have a material adverse effect on our financial condition, results of operations and cash flows.

Government Assistance

On March 27, 2020, the U.S.

In response to the COVID-19 pandemic, on March 27, 2020, the U.S.

Government enacted the CARES Act, which among other things, provided employers an option to defer payroll tax payments for a limited period.

As of December 31, 2021, we have deferred $21.4 million of payroll taxes which are due in two equal installments by early January 2022 and 2023.

As of December 31, 2022, we deferred $10.7 million of payroll taxes, which was subsequently paid in January 2023.

Additionally, on April 11, 2020, the Canadian Government enacted the CEWS under the COVID-19 Economic Response Plan to prevent large layoffs and help employers offset a portion of their employee salaries and wages for a limited period.

During the years ended December 31, 2021 and 2020, we recognized subsidies under the CEWS as offsets to operating expenses of $5.4 million and $20.4 million, respectively.

The Canadian Government extended the CEWS to May 2022 with a number of modifications.

These modifications significantly decreased the amount of claims for which we qualified when compared to the prior year.

See Item 1A of this Report for an additional discussion of risks of COVID-19 on our business.

During the years ended December 31, 2022, 2021 and 2020, we recognized subsidies under the CEWS as offsets to operating expenses of $0.6 million, $5.4 million and $20.4 million, respectively.

The timeframe for submitting new claims under the CEWS ended in May 2022, and we do not expect to qualify for further assistance under this program.

Results of Operations – Years Ended December 31, 2022, 2021 and 2020

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(In thousands)

Nuclear Operations Group $ 1,622,598 $ 1,646,257 $ 1,428,587

Nuclear Power Group 407,082 371,269 352,640

Nuclear Services Group 123,538 136,493 131,339

Government Operations $ 1,808,483 $ 1,725,097 $ 1,763,127

Commercial Operations 427,358 407,082 371,269

Eliminations (3,007) (8,105) (10,880)

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OPERATING INCOME:

Nuclear Operations Group $ 308,645 $ 326,049 $ 298,328

Nuclear Power Group 52,548 51,989 53,815

Nuclear Services Group 27,932 26,436 14,226

Other (24,333) (22,309) (23,099)

Government Operations $ 336,501 $ 329,549 $ 345,250

Commercial Operations 27,418 35,243 36,915

$ 363,919 $ 364,792 $ 382,165

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Total Operating Income $ 348,571 $ 345,848 $ 358,552

This section discusses our 2021 and 2020 results of operations and contains year-to-year comparisons between 2021 and 2020.

Discussions of our 2019 results and year-to-year comparisons between 2020 and 2019 that are not included in this Report can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020.

Consolidated Results of Operations

Consolidated revenues increased slightly to $2,124.1 million in the year ended December 31, 2021 compared to $2,123.5 million in 2020, due to an increase in our Nuclear Power Group segment revenues of $35.8 million, which was partially offset by decreases in revenues in our Nuclear Operations Group and Nuclear Services Group segments of $23.7 million and $13.0 million, respectively.

Year Ended December 31, 2022 vs.

Consolidated revenues increased 5.1%, or $108.8 million, to $2,232.8 million in the year ended December 31, 2022 compared to $2,124.1 million in 2021, due to increases in our Government Operations and Commercial Operations segments of $83.4 million and $20.3 million, respectively.

Consolidated operating income increased $2.7 million to $348.6 million in the year ended December 31, 2022 compared to $345.8 million in 2021.

Operating income in our Government Operations segment increased $7.0 million, and we also experienced lower Unallocated Corporate expenses of $3.6 million.

These increases were partially offset by lower operating income in our Commercial Operations segment of $7.8 million when compared to the prior year.

Year Ended December 31, 2021 vs.

Consolidated revenues increased slightly to $2,124.1 million in the year ended December 31, 2021 compared to $2,123.5 million in 2020, due to an increase in our Commercial Operations segment of $35.8 million which was partially offset by a decrease in revenues in our Government Operations segment of $38.0 million.

Consolidated operating income decreased $12.7 million to $345.8 million in the year ended December 31, 2021 compared to $358.6 million in 2020.

Operating income in our Nuclear Operations Group and Other segments decreased by $17.4 million and $2.0 million, respectively.

These decreases were partially offset by increases in our Nuclear Power Group and Nuclear Services Group segments of $0.6 million and $1.5 million, respectively.

We also experienced lower Unallocated Corporate expenses of $4.7 million in 2021 when compared to the prior year.

Nuclear Operations Group

Year Ended December 31,

2021 2020 $ Change

Operating income in our Government Operations and Commercial Operations segments decreased by $15.7 million and $1.7 million, respectively.

These decreases were partially offset by lower Unallocated Corporate expenses of $4.7 million in 2021 when compared to the prior year.

Government Operations

Year Ended December 31, Year Ended December 31,

2022 2021 $ Change 2021 2020 $ Change

(In thousands)

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% of Revenues 18.6% 19.1% 19.1% 19.6%

Revenues decreased by 1.4%, or $23.7 million, to $1,622.6 million in the year ended December 31, 2021 compared to $1,646.3 million in 2020.

The decrease was primarily related to the timing of the procurement of certain long-lead materials when compared to the prior year, which was partially offset by additional volume in the manufacture of nuclear components for U.S.

Year Ended December 31, 2022 vs.

Revenues increased 4.8%, or $83.4 million, to $1,808.5 million in the year ended December 31, 2022 compared to $1,725.1 million in 2021.

The increase was primarily related to continued growth in design and engineering work executed by our advanced technologies business, particularly in the defense and space markets, resulting in revenue growth of $35.4 million.

Increases in volume related to the manufacture of nuclear components for U.S.

Government programs and favorable timing in the procurement of certain long-lead materials combined for an additional increase in revenues of $31.9 million when compared to the prior year.

Revenues related to our uranium conversion and purification services contract and downblending operations also increased by $26.4 million.

These increases were offset by a reduction in volume related to missile tubes totaling $18.6 million.

Operating income increased $7.0 million to $336.5 million in the year ended December 31, 2022 compared to $329.5 million in 2021.

The increase was due to the operating income impact of the changes in revenues noted above in addition to an increase in operating income of $16.1 million associated with our joint venture activities, which include the Savannah River Site Integrated Mission Completion Contract that commenced in February 2022.

These increases were partially offset by lower levels of favorable contract adjustments which included an $11.3 million unfavorable adjustment related to the manufacture of non-nuclear components.

Year Ended December 31, 2021 vs.

Revenues decreased 2.2%, or $38.0 million, to $1,725.1 million in the year ended December 31, 2021 compared to $1,763.1 in 2020.

The decrease was primarily related to the timing of the procurement of certain long-lead materials when compared to the prior year.

In addition, we experienced a decrease in revenues related to the divestiture of our U.S.-based commercial nuclear services business during the second quarter of 2020 and lower revenues at our Naval Reactors decommissioning and decontamination project, which totaled $23.9 million.

These decreases were partially offset by additional volume in the manufacture of nuclear components for U.S.

Government programs and additional volume in our naval nuclear fuel and downblending operations.

Operating income decreased $17.4 million to $308.6 million in the year ended December 31, 2021 compared to $326.0 million in 2020.

The decrease was due to the operating income impact of the changes in revenue noted above as well as lower levels of net favorable contract adjustments recorded in the current year when compared to the prior year.

Nuclear Power Group

Year Ended December 31,

2021 2020 $ Change

We also experienced an increase in design and engineering work executed by our advanced technologies business of $11.6 million, particularly in the space and defense markets.

Operating income decreased $15.7 million to $329.5 million in the year ended December 31, 2021 compared to $345.3 million in the year ended December 31, 2020.

The decrease was due to the operating income impact of the changes in revenues noted above as well as lower levels of net favorable contract adjustments recorded in 2021 when compared to the prior year.

These decreases were partially offset by an increase in operating income of $4.5 million associated with our joint venture activities.

Commercial Operations

Year Ended December 31, Year Ended December 31,

2022 2021 $ Change 2021 2020 $ Change

(In thousands)

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% of Revenues 6.4% 8.7% 8.7% 9.9%

Revenues increased by 9.6%, or $35.8 million, to $407.1 million in the year ended December 31, 2021 compared to $371.3 million in 2020.

Year Ended December 31, 2022 vs.

Revenues increased 5.0%, or $20.3 million, to $427.4 million in the year ended December 31, 2022 compared to $407.1 million in 2021.

The increase was primarily related to higher levels of in-plant inspection, maintenance and modification services totaling $32.5 million as well as higher revenues in our nuclear fuel handling and medical radioisotopes businesses, which together totaled $21.0 million.

These increases were partially offset by decreased revenues in our fuel fabrication business of $20.1 million due to the cyclical nature in the timing of the award of commercial nuclear fuel contracts.

Revenues associated with our parts manufacturing business also decreased by $18.8 million when compared to the prior year.

Operating income decreased $7.8 million to $27.4 million in the year ended December 31, 2022 compared to $35.2 million in 2021, due to a $4.8 million decrease in wage subsidies we received under the CEWS to offset the effects of COVID-19 on our Canadian operations in addition to higher levels of unfavorable contract adjustments when compared to the prior year.

These decreases were offset by the operating income impact of the changes in revenues noted above.

Year Ended December 31, 2021 vs.

Revenues increased 9.6%, or $35.8 million, to $407.1 million in the year ended December 31, 2021 compared to $371.3 in 2020.

The increase was primarily related to higher levels of in-plant inspection, maintenance and modification services totaling $26.2 million in addition to increases in revenues related to our nuclear fuel handling capabilities of $13.3 million.

We also experienced higher levels of revenue in our fuel fabrication and medical radioisotopes businesses when compared to the prior year.

also experienced higher revenues in our fuel fabrication and medical radioisotopes businesses in 2021 when compared to the prior year.

These increases were partially offset by lower activity in our nuclear components business of $19.8 million, primarily associated with a major steam generator design and supply contract.

Operating income increased $0.6 million to $52.5 million in the year ended December 31, 2021 compared to $52.0 million in 2020, due to the operating income impact of the changes in revenues noted above as well as a $2.0 million gain resulting from the settlement of contingent consideration associated with the Precision Manufacturing acquisition.

These increases were partially offset by a decrease in the amount of wage subsidies we received under the CEWS to offset the effects of COVID-19 on our Canadian operations of $15.0 million when compared to the prior year.

Nuclear Services Group

Year Ended December 31,

2021 2020 $ Change

(In thousands)

Revenues $ 123,538 $ 136,493 $ (12,955)

Operating Income $ 27,932 $ 26,436 $ 1,496

% of Revenues 22.6% 19.4%

Revenues decreased by 9.5%, or $13.0 million, to $123.5 million in the year ended December 31, 2021 compared to $136.5 million in 2020, primarily attributable to the divestiture of our U.S.-based commercial nuclear services business during the second quarter of 2020 and lower revenues at our Naval Reactors decommissioning and decontamination project.

These decreases were partially offset by an increase in design and engineering work executed by our advanced technologies business, particularly in the space and defense markets.

Operating income increased $1.5 million to $27.9 million in the year ended December 31, 2021 compared to $26.4 million in 2020 due to higher site fee income, which was partially offset by the operating income impact associated with the changes in revenues noted above.

Year Ended December 31,

2021 2020 $ Change

(In thousands)

Operating Income $ (24,333) $ (22,309) $ (2,024)

Operating income decreased $2.0 million to a loss of $24.3 million in the year ended December 31, 2021 compared to a loss of $22.3 million in 2020, primarily due to an increase in costs associated with the commercialization of our medical radioisotope technology.

Operating income decreased $1.7 million to $35.2 million in the year ended December 31, 2021 compared to $36.9 million in 2020, due primarily to a $15.0 million decrease in the amount of wage subsidies we received under the CEWS to offset the effects of COVID-19 on our Canadian operations when compared to the prior year in addition to a $2.3 million increase in the costs associated with the commercialization of our medical radioisotope technology.

These decreases were partially offset by the operating income impact of the changes in revenues noted above as well as a $2.0 million gain resulting from the settlement of contingent consideration associated with the Precision Manufacturing acquisition.

Unallocated Corporate

Unallocated corporate expenses decreased $3.6 million to $15.3 million in the year ended December 31, 2022 compared to $18.9 million in 2021, primarily due to a decrease in healthcare costs and lower compensation related expense inclusive of stock-based compensation.

These decreases were partially offset by an increase in restructuring related costs and higher levels of legal and consulting costs associated with due diligence activities when compared to the prior year.

Unallocated corporate expenses decreased $4.7 million to $18.9 million in the year ended December 31, 2021 compared to $23.6 million in 2020, primarily due to a decrease in legal and consulting costs associated with due diligence activities in addition to a $2.6 million reserve related to a franchise tax audit of years prior to 2016, which was recorded in the year ended December 31, 2020.

Other Income (Expense)

During the year ended December 31, 2022, other income (expense) decreased $83.2 million to a loss of $33.3 million compared to a gain of $49.9 million in 2021.

A component of other income (expense) is net periodic benefit cost, which includes mark to market adjustments due to our immediate recognition of net actuarial gains (losses) for our pension and postretirement benefit plans.

Net periodic benefit cost resulted in a decrease to other income of $88.9 million in 2022 when compared to the prior year, caused by increased losses related to mark to market adjustments totaling $86.2 million.

This decrease was offset by an early redemption premium of $10.8 million associated with the redemption of the Senior Notes due 2026, as defined below, which occurred in the third quarter of 2021.

During the year ended December 31, 2021, other income (expense) increased $46.2 million to a gain of $49.9 million compared to a gain of $3.6 million in 2020.

A component of other income (expense) is net periodic benefit cost inclusive of mark to market adjustments due to our immediate recognition of net actuarial gains (losses) for our pension and postretirement benefit plans.

Net periodic benefit cost resulted in an increase to other income of $61.3 million when compared to the prior year, caused by increased gains related to mark to market adjustments totaling $39.6 million.

Net periodic benefit cost resulted in an increase to other income of $61.3 million in 2021 when compared to the prior year, caused by increased gains related to mark to market adjustments totaling $39.6 million.

This increase was offset by an early redemption premium of $10.8 million and the write-off of deferred debt issuance costs totaling $4.2 million associated with the redemption of the Senior Notes due 2026, as defined below.

Provision for Income Taxes

Year Ended December 31,

2021 2020 $ Change

Year Ended December 31, Year Ended December 31,

2022 2021 $ Change 2021 2020 $ Change

(In thousands)

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Effective Tax Rate

For the year ended December 31, 2021, our provision for income taxes increased $6.4 million to $89.4 million, while income before provision for income taxes increased $33.5 million to $395.7 million when compared to the prior year.

24.1% 22.6% 22.6% 22.9%

For the year ended December 31, 2022, our provision for income taxes decreased $13.7 million to $75.8 million, while income before provision for income taxes decreased $81.3 million to $314.4 million when compared to the prior year.

Our effective tax rate was 24.1% for the year ended December 31, 2022 compared to 22.6% for the year ended December 31, 2021.

Our effective tax rate was 22.6% for the year ended December 31, 2021 compared to 22.9% for the year ended December 31, 2020.

Our effective tax rates for the years ended December 31, 2022, 2021 and 2020 were higher than the U.S.

corporate income tax rate of 21% primarily due to state income taxes within the U.S.

income tax rate of 21% primarily due to state income taxes within the U.S.

and the unfavorable rate differential associated with our Canadian earnings.

These unfavorable rate impacts were partially offset by benefits recognized for excess tax benefits related to employee share-based payments of $0.3 million and $1.1 million for the years ended December 31, 2021 and 2020, respectively.

See Note 5 to our consolidated financial statements included in this Report for further information on income taxes.

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Liquidity and Capital Resources

Our overall liquidity position, which we generally define as our unrestricted cash and cash equivalents plus amounts available for borrowings under our credit facility, decreased by approximately $301.6 million to $347.7 million at December 31, 2021 compared to $649.3 million at December 31, 2020, primarily attributable to an increase in net borrowings of long-term debt to fund capital expansion projects and repurchases of common stock.

Our overall liquidity position, which we generally define as our unrestricted cash and cash equivalents plus amounts available for borrowings under our credit facility, increased by approximately $185.1 million to $532.7 million at December 31, 2022 compared to $347.7 million at December 31, 2021, primarily attributable to the borrowing of the Term Loan, as defined below, the proceeds from which were used to repay borrowings under our Revolving Credit Facility, as defined below.

We experienced net cash generated from operations in each of the years ended December 31, 2022, 2021 and 2020.

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Credit Facility

On March 24, 2020, we entered into an Amendment No.

1 to Credit Agreement, which amended the Credit Agreement dated as of May 24, 2018 (as amended, the "Credit Facility") with Wells Fargo Bank, N.A., as administrative agent, and the other lenders party thereto.

The Credit Facility provides for a $750 million senior secured revolving credit facility (the "Revolving Credit Facility").

All obligations under the Revolving Credit Facility are scheduled to mature on March 24, 2025.

The proceeds of loans under the Revolving Credit Facility are available for working capital needs, permitted acquisitions and other general corporate purposes.

The Credit Facility allows for additional parties to become lenders and, subject to certain conditions, for the increase of the commitments under the Credit Facility, subject to an aggregate maximum for all additional commitments of (1) the greater of (a) $250 million and (b) 65% of EBITDA, as defined in the Credit Facility, for the last four full fiscal quarters, plus (2) all voluntary prepayments of the Term Loans, plus (3) additional amounts provided the Company is in compliance with a pro forma first lien leverage ratio test of less than or equal to 2.50 to 1.00.

On October 12, 2022, we entered into an Amended and Restated Credit Agreement (the "Credit Facility") with Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto, which amended and restated our then existing secured credit facility (the "Former Credit Facility"), which consisted of a $750 million senior secured revolving credit facility.

The Credit Facility consists of a $750 million senior secured revolving credit facility (the "Revolving Credit Facility") and a $250 million senior secured term A loan (the "Term Loan").

The Revolving Credit Facility and the Term Loan are scheduled to mature on October 12, 2027.

All proceeds from the Term Loan were used to repay outstanding indebtedness under the Former Credit Facility.

The proceeds of loans under the Credit Facility are available for working capital needs, permitted acquisitions and other general corporate purposes.

The Credit Facility allows for additional parties to become lenders and, subject to certain conditions, for the increase of the commitments under the Credit Facility, subject to an aggregate maximum for all additional commitments of (1) the greater of (a) $400 million and (b) 100% of EBITDA, as defined in the Credit Facility, for the last four full fiscal quarters, plus (2) all voluntary prepayments of the Term Loan, plus (3) additional amounts provided the Company is in compliance with a pro forma first lien leverage ratio test of less than or equal to 2.50 to 1.00.

The Company's obligations under the Credit Facility are guaranteed, subject to certain exceptions, by substantially all of the Company's present and future wholly owned domestic restricted subsidiaries.

The Credit Facility is secured by first-priority liens on certain assets owned by the Company and its subsidiary guarantors (other than its subsidiaries comprising its Nuclear Operations Group segment and a portion of its Nuclear Services Group segment).

The Revolving Credit Facility requires interest payments on revolving loans on a periodic basis until maturity.

We may prepay all loans under the Credit Facility at any time without premium or penalty (other than customary Eurocurrency breakage costs), subject to notice requirements.

The Credit Facility includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter.

The Credit Facility is secured by first-priority liens on certain assets owned by the Company and its subsidiary guarantors (other than its subsidiaries comprising a portion of its Government Operations segment).

The Credit Facility requires interest payments on outstanding loans on a periodic basis until maturity.

We are required to make quarterly amortization payments on the Term Loan in an amount equal to (i) 0.625% of the initial aggregate principal amount of the Term Loan on the last business day of each quarter beginning the quarter ending March 31, 2023 and ending the quarter ending December 31, 2024 and (ii) 1.25% of the initial aggregate principal amount of the Term Loan on the last business day of each quarter ending after December 31, 2024, with the balance of the Term Loan due at maturity.

We may prepay all loans under the Credit Facility at any time without premium or penalty (other than customary Term SOFR breakage costs), subject to notice requirements.

The Credit Facility includes financial covenants that are evaluated on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter.

The maximum permitted leverage ratio is 4.00 to 1.00, which may be increased to 4.50 to 1.00 for up to four consecutive fiscal quarters after a material acquisition.

The minimum consolidated interest coverage ratio is 3.00 to 1.00.

The minimum consolidated

interest coverage ratio is 3.00 to 1.00.

In addition, the Credit Facility contains various restrictive covenants, including with respect to debt, liens, investments, mergers, acquisitions, dividends, equity repurchases and asset sales.

As of December 31, 2022, we were in compliance with all covenants set forth in the Credit Facility.

Outstanding loans under the Revolving Credit Facility bear interest at our option at either (1) the Eurocurrency rate plus a margin ranging from 1.0% to 1.75% per year or (2) the base rate plus a margin ranging from 0.0% to 0.75% per year.

Outstanding loans under the Credit Facility bear interest at our option at either (1) the Term SOFR plus a credit spread adjustment of 0.10% plus a margin ranging from 1.0% to 1.75% per year or (2) the base rate plus a margin ranging from 0.0% to 0.75% per year.

We are charged a commitment fee on the unused portion of the Revolving Credit Facility, and that fee ranges from 0.15% to 0.225% per year.

Additionally, we are charged a letter of credit fee of between 1.0% and 1.75% per year with respect to the amount of each financial letter of credit issued under the Credit Facility, and a letter of credit fee of between 0.75% and 1.05% per year with respect to the amount of each performance letter of credit issued under the Credit Facility.

The applicable margin for loans, the commitment fee and the letter of credit fees set forth above will vary quarterly based on our leverage ratio.

Based on the leverage ratio applicable at December 31, 2021, the margin for Eurocurrency rate and base rate revolving loans was 1.50% and 0.50%, respectively, the letter of credit fee for financial letters of credit and performance letters of credit was 1.50% and 0.90%, respectively, and the commitment fee for the unused portion of the Revolving Credit Facility was 0.20%.

As of December 31, 2021, borrowings and letters of credit issued under the Revolving Credit Facility totaled $400.0 million and $36.2 million, respectively.

As a result, as of December 31, 2021 we had $313.8 million available under the

Revolving Credit Facility for borrowings and to meet letter of credit requirements.

As of December 31, 2021, the interest rate on outstanding borrowings under our Credit Facility was 1.61%.

Additionally, we are charged a letter of credit fee of between 1.0% and 1.75% per year with respect to the amount of each financial letter of credit issued under the Revolving Credit Facility, and a letter of credit fee of between 0.75% and 1.05% per year with respect to the amount of each performance letter of credit issued under the Revolving Credit Facility.

The applicable margin for loans, the commitment fee and the letter of credit fees set forth above will vary quarterly based on our consolidated total net leverage ratio.

The margin for Term SOFR and base rate loans was 1.50% and 0.50%, respectively, the letter of credit fee for financial letters of credit and performance letters of credit was 1.50% and 0.90%, respectively, and the commitment fee for the unused portion of the Revolving Credit Facility was 0.20% from the closing date through the date of our delivery of the compliance certificate for the fiscal quarter ended December 31, 2022.

As of December 31, 2022, borrowings under our Term Loan totaled $250.0 million, borrowings and letters of credit issued under the Revolving Credit Facility totaled $250.0 million and $2.5 million, respectively, and we had $497.5 million available under the Revolving Credit Facility for borrowings and to meet letter of credit requirements.

As of December 31, 2022, the weighted-average interest rate on outstanding borrowings under our Credit Facility was 5.93%.

The Credit Facility generally includes customary events of default for a secured credit facility.

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Bank National Association, as trustee.

On July 15, 2021, using cash on hand and borrowings under the Credit Facility, we redeemed the Senior Notes due 2026 at a redemption price equal to 102.688% of the principal amount, resulting in an early redemption premium of $10.8 million and the write-off of deferred debt issuance costs totaling $4.2 million.

On July 15, 2021, using cash on hand and borrowings under the Former Credit Facility, we redeemed the Senior Notes due 2026 at a redemption price equal to 102.688% of the principal amount, resulting in an early redemption premium of $10.8 million and the write-off of deferred debt issuance costs totaling $4.2 million.

These charges were recorded in our consolidated statement of income during the year ended December 31, 2021 as components of Other – net and Interest expense, respectively.

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The Senior Notes due 2028 will mature on June 30, 2028.

We may redeem the Senior Notes due 2028, in whole or in part, at any time on or after June 30, 2023 at a redemption price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the twelve-month period beginning on June 30, 2023, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the twelve-month period beginning on June 30, 2024 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on or after June 30, 2025, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

At any time prior to June 30, 2023, we may also redeem up to 40.0% of the Senior Notes due 2028 with net cash proceeds of certain equity offerings at a redemption price equal to 104.125% of the principal amount of the Senior Notes due 2028 to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

We may redeem the Senior Notes due 2028, in whole or in part, at any time on or after June 30, 2023 at a redemption price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on June 30, 2023, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on June 30, 2024 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on or after June 30, 2025, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, at any time prior to June 30, 2023, we may redeem the Senior Notes due 2028, in whole or in part, at a redemption price equal to 100.0% of the principal amount of the Senior Notes due 2028 to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus an applicable "make-whole" premium.

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The Senior Notes due 2029 will mature on April 15, 2029.

We may redeem the Senior Notes due 2029, in whole or in part, at any time on or after April 15, 2024 at a redemption price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the twelve-month period beginning on April 15, 2024, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the twelve-month period beginning on April 15, 2025 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on or after April 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

We may redeem the Senior Notes due 2029, in whole or in part, at any time on or after April 15, 2024 at a redemption price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on April 15, 2024, (ii) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on April 15, 2025 and (iii) 100.0% of the principal amount to be redeemed if the redemption occurs on or after April 15, 2026, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

At any time prior to April 15, 2024, we may also redeem up to 40.0% of the Senior Notes due 2029 with net cash proceeds of certain equity offerings at a redemption price equal to 104.125% of the principal amount of the Senior Notes due 2029 to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

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We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's discretion, and the bonding facilities generally permit the surety, in its sole discretion, to terminate the facility or demand collateral.

Although there can be no assurance that we will maintain our surety bonding capacity, we believe our current capacity is adequate to support our existing requirements for the next twelve months.

Although there can be no assurance that we will maintain our surety bonding capacity, we believe our current capacity is adequate to support our existing requirements for the next 12 months.

In addition, these bonds generally indemnify the beneficiaries should we fail to perform our obligations under the applicable agreements.

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As of December 31, 2022, bonds issued and outstanding under these arrangements totaled approximately $113.5 million.

Similarly, we have provided letters of credit to governmental agencies and contractual counterparties to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters.

We utilize our Revolving Credit Facility and a bilateral letter of credit facility to support such obligations, but the issuance of letters of credit under our bilateral letter of credit facility is at the issuer’s discretion, and our bilateral facility generally permits the issuer, in its sole discretion, to demand collateral if the issuer does not otherwise have the benefit of the collateral under our Credit Facility.

Although there can be no assurance that we will maintain our bilateral letter of credit capacity, we believe our current capacity, together with capacity under our Revolving Credit Facility, is adequate to support our existing requirements for the next 12 months.

As of December 31, 2022, letters of credit issued and outstanding under our bilateral letter of credit facility totaled approximately $34.9 million, and such letters of credit are secured by the collateral under our Credit Facility.

Cash, Cash Equivalents, Restricted Cash and Investments

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Total $ 52,891 $ 53,144

Our working capital increased by $70.2 million to $314.1 million at December 31, 2021 from $243.9 million at December 31, 2020, primarily attributable to changes in net contracts in progress and advance billings due to the timing of project cash flows and lower levels of incentive compensation recognized in the current year.

Our net cash provided by operating activities increased by $189.6 million to $386.0 million in the year ended December 31, 2021, compared to $196.4 million in the year ended December 31, 2020, primarily attributable to the timing of project cash flows.

Our net cash used in investing activities increased by $39.3 million to $304.7 million in the year ended December 31, 2021, compared to $265.3 million in the year ended December 31, 2020.

The increase in cash used in investing activities was

primarily attributable to an increase in purchases of property, plant and equipment of $56.0 million, offset by our acquisition of Precision Manufacturing for $15.9 million during the year ended December 31, 2020.

Our net cash used in financing activities increased by $115.2 million to $90.1 million in the year ended December 31, 2021, compared to cash provided by financing activities of $25.0 million in the year ended December 31, 2020.

The increase in net cash used in financing activities was primarily attributable to an increase in the repurchases of common stock of $203.8 million compared to the prior year and the change in bank overdrafts of $88.7 million in 2021.

These increases in cash usage were partially offset by an increase in net borrowings of long-term debt of $275.2 million compared to the prior year.

Our working capital increased by $89.6 million to $403.8 million at December 31, 2022 from $314.1 million at December 31, 2021, primarily attributable to the timing of project cash flows and vendor payments.

Our net cash provided by operating activities decreased by $141.3 million to $244.7 million in the year ended December 31, 2022, compared to $386.0 million in the year ended December 31, 2021.

The decrease in cash provided by operating activities was primarily attributable to the changes in working capital discussed above as well as an $88.7 million customer payment delayed until the first quarter of 2021, which was originally expected in 2020.

Our net cash used in investing activities decreased by $48.4 million to $256.2 million in the year ended December 31, 2022, compared to $304.7 million in the year ended December 31, 2021.

The decrease in cash used in investing activities was primarily attributable to a decrease in purchases of property, plant and equipment of $112.7 million, which was partially offset by the $47.3 million acquisition of Dynamic and Cunico as well as an $11.5 million increase in investments in equity method investees during the year ended December 31, 2022.

Our net cash provided by financing activities increased by $104.1 million to $14.0 million in the year ended December 31, 2022, compared to cash used in financing activities of $90.1 million in the year ended December 31, 2021.

The increase in net cash provided by financing activities was primarily attributable to a reduction in repurchases of common stock of $205.8 million when compared to the prior year and the repayment of bank overdrafts of $88.7 million in 2021.

This increase was partially offset by a reduction in net borrowings of long-term debt of $225.0 million when compared to the prior year.

At December 31, 2022, we had short-term and long-term investments with a fair value of $11.9 million.

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Other cash requirements include, among other things, capital expenditures, payment of dividends, repurchases of common stock, capital contributions for joint ventures and contributions to our pension and other postretirement benefit plans.

Since 2017, we have made considerable investments in property, plant and equipment to support the growth of our Nuclear Operations Group and Nuclear Power Group segments.

Significant projects included the expansion of Nuclear Operations Group facilities to support increased demand from the U.S.

Government and the commercialization of our medical radioisotope technology in our Nuclear Power Group segment.

We expect these heightened spending levels to begin to decline in 2022 as these capital expansion projects near completion.

Since 2017, we have made considerable investments in property, plant and equipment to support the growth of our Government Operations and Commercial Operations segments.

Significant projects included the expansion of Government Operations facilities to support increased demand from the U.S.

Government and the commercialization of our medical radioisotope technology in our Commercial Operations segment.

We expect these heightened spending levels to decline as these capital expansion projects near completion.

During the year ended December 31, 2022, we paid $81.1 million in dividends to holders of our common stock.

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See Item 5 of this Report for additional share repurchase information.

During the year ended December 31, 2021, one of our joint ventures was awarded a DOE contract, which we expect to transition in 2022.

Over the next 12 months, we anticipate significant initial capital contributions related to this joint venture.

We expect cash requirements totaling approximately $5.4 million for contributions to our pension plans in 2023.

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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 7. Management’s Discussion and Analysis