What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-27 compared with 2023-02-23 · 172 added, 233 removed, 1444 unchanged (22% of the section changed)

31 unchanged sentences

• We tested the effectiveness of controls over revenue recognized over time, including those over cost estimates at completion for performance obligations.

• We tested recorded revenue using analytical procedures.

• We analyzed cumulative adjustments recorded during the year and separately tested those with characteristics of audit interest due to their size to determine that the adjustments were the result of changes in facts and circumstances.

• Unless otherwise tested separately below, we tested recorded revenue using analytical procedures.

• We analyzed contracts with customers recognized over time to identify whether there are contracts with characteristics of audit interest.

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◦ Compared the transaction price to the consideration expected to be received based on current rights and obligations under the contract, including modifications that were agreed upon with the customer.

◦ Tested the mathematical accuracy of management’s calculation of the percent complete, the profit margin and the revenue recognized over time.

◦ Evaluated a selection of cost estimates within the selected contract as follows:

▪ Evaluated costs incurred to date based on historical experience or costs of similar performance obligations, as appropriate, to evaluate the reasonableness of management’s estimates.

▪ Evaluated management’s ability to achieve the cost estimates by performing corroborating inquiries with the Company’s project manager and comparing the estimates to management’s work plans and/or supplier contracts, as appropriate.

◦ Tested the mathematical accuracy of management’s calculation of the profit margin and the revenue recognized based on the costs incurred during the year, consistent with the cost-plus fixed fee nature of the contract.

/S/ DELOITTE & TOUCHE LLP

3 unchanged sentences

BWX TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

Current Assets:

Cash and cash equivalents $ 35,244 $ 33,891

Restricted cash and cash equivalents 2,928 2,896

Investments 3,804 3,811

Accounts receivable – trade, net 60,782 70,663

Accounts receivable – other 26,894 16,651

Retainages 48,566 51,507

Contracts in progress 538,365 546,595

Other current assets 55,036 47,718

Total Current Assets 771,619 773,732

Property, Plant and Equipment, Net 1,134,897 1,045,640

Investments 8,097 9,558

Goodwill 293,165 285,502

Deferred Income Taxes 20,585 21,394

Investments in Unconsolidated Affiliates 100,198 85,284

Intangible Assets 193,612 185,551

Other Assets 96,766 94,719

TOTAL $ 2,618,939 $ 2,501,380

See accompanying notes to consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

(In thousands, except share

and per share amounts)

Current Liabilities:

Current maturities of long-term debt $ 6,250 $ —

Accounts payable 127,112 189,842

Accrued employee benefits 61,079 71,835

Accrued liabilities – other 84,693 86,319

Advance billings on contracts 88,726 111,619

Total Current Liabilities 367,860 459,615

Long-Term Debt

1,282,624 1,189,304

Accumulated Postretirement Benefit Obligation

18,157 24,333

Environmental Liabilities

90,989 92,642

Pension Liability

57,832 59,388

Other Liabilities

53,122 38,863

Commitments and Contingencies (Note 10)

Stockholders' Equity:

Common stock, par value $ 0.01 per share, authorized 325,000,000 shares;

issued 127,671,756 and 127,311,985 shares at December 31, 2022 and 2021, respectively

Preferred stock, par value $ 0.01 per share, authorized 75,000,000 shares;

no shares issued

Capital in excess of par value 189,263 174,288

Retained earnings 1,932,970 1,775,751

Treasury stock at cost, 36,417,480 and 35,915,747 shares at December 31, 2022 and 2021, respectively

( 1,353,270 ) ( 1,326,280 )

Accumulated other comprehensive income (loss) ( 21,930 ) 12,143

Stockholders' Equity – BWX Technologies, Inc.

748,310 637,175

Noncontrolling interest 45 60

Total Stockholders' Equity 748,355 637,235

$ 2,618,939 $ 2,501,380

See accompanying notes to consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

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Interest income

2,359 758 416

Interest expense

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717 267 ( 500 )

Reclassification adjustment for losses (gains) included in net income, net of tax (benefit) provision of $( 181 ), $( 103 ) and $ 173 , respectively

Reclassification adjustment for (gains) losses included in net income, net of tax provision (benefit) of $ 91 , $( 181 ) and $( 103 ), respectively

( 264 ) 532 302

4 unchanged sentences

2,669 2,626 2,295

Unrealized (losses) gains arising during the period, net of tax benefit (provision) of $ 28 , $( 24 ) and $( 56 ), respectively

Unrealized gains (losses) arising during the period, net of tax (provision) benefit of $( 27 ), $ 28 and $( 24 ), respectively

100 ( 105 ) 90

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BWX TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

Current Assets:

Cash and cash equivalents $ 75,766 $ 35,244

Restricted cash and cash equivalents 2,858 2,928

Investments — 3,804

Accounts receivable – trade, net 70,180 60,782

Accounts receivable – other 16,339 26,894

Retainages 55,181 48,566

Contracts in progress 533,155 538,365

Other current assets 64,322 55,036

Total Current Assets 817,801 771,619

Property, Plant and Equipment, Net 1,228,520 1,134,897

Investments 9,496 8,097

Goodwill 297,020 293,165

Deferred Income Taxes 16,332 20,585

Investments in Unconsolidated Affiliates 88,608 100,198

Intangible Assets 185,510 193,612

Other Assets 103,778 96,766

TOTAL $ 2,747,065 $ 2,618,939

See accompanying notes to consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

(In thousands, except share

and per share amounts)

Current Liabilities:

Current maturities of long-term debt $ 6,250 $ 6,250

Accounts payable 126,651 127,112

Accrued employee benefits 64,544 61,079

Accrued liabilities – other 70,210 84,693

Advance billings on contracts 107,391 88,726

Total Current Liabilities 375,046 367,860

Long-Term Debt

1,203,422 1,282,624

Accumulated Postretirement Benefit Obligation

18,466 18,157

Environmental Liabilities

90,575 90,989

Pension Liability

82,786 57,832

Other Liabilities

43,469 53,122

Commitments and Contingencies (Note 10)

Stockholders' Equity:

Common stock, par value $ 0.01 per share, authorized 325,000,000 shares;

issued 128,065,521 and 127,671,756 shares at December 31, 2023 and 2022, respectively

Preferred stock, par value $ 0.01 per share, authorized 75,000,000 shares;

no shares issued

Capital in excess of par value 206,478 189,263

Retained earnings 2,093,917 1,932,970

Treasury stock at cost, 36,537,695 and 36,417,480 shares at December 31, 2023 and 2022, respectively

( 1,360,862 ) ( 1,353,270 )

Accumulated other comprehensive income (loss) ( 7,463 ) ( 21,930 )

Stockholders' Equity – BWX Technologies, Inc.

933,351 748,310

Noncontrolling interest ( 50 ) 45

Total Stockholders' Equity 933,301 748,355

$ 2,747,065 $ 2,618,939

See accompanying notes to consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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Balance December 31, 2020 127,009,536 $ 1,270 $ 153,800 $ 1,549,950 $ 8,198 $ ( 1,095,452 ) $ 617,766 $ 2 $ 617,768

Recently adopted accounting standards — — — — — — — — —

Net income — — — 305,871 — — 305,871 417 306,288

82 unchanged sentences

Other, net 756 6 1,674

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 13,952 ( 90,136 ) 25,046

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ( 169,371 ) 13,952 ( 90,136 )

EFFECTS OF EXCHANGE RATE CHANGES ON CASH 1,937 ( 1,205 ) 240

25 unchanged sentences

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 annual report on Form 10-K.

Our reportable segments are further described as follows:

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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.

This segment also provides specialized engineering services that include structural component design, 3-D thermal-hydraulic engineering analysis, weld and robotic process development,

electrical and controls engineering and metallurgy and materials engineering.

This segment also provides specialized engineering services that include structural component design, 3-D thermal-hydraulic engineering analysis, weld and robotic process development, electrical and controls engineering and metallurgy and materials engineering.

In addition, this segment offers in-plant inspection, maintenance and modification services for nuclear steam generators, heat exchangers, reactors, fuel handling systems and balance of plant equipment, as well as specialized non-destructive examination and tooling/repair solutions.

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Contracts and Revenue Recognition

We generally recognize contract revenues and related costs over time for individual performance obligations based on a cost-to-cost method in accordance with FASB Topic Revenue from Contracts with Customers .

We generally recognize contract revenues and related costs over time for individual performance obligations based on a cost-to-cost method in accordance with the Financial Accounting Standards Board ("FASB") Topic Revenue from Contracts with Customers .

We recognize estimated contract revenue and resulting income based on the measurement of the extent of progress toward completion as a percentage of the total project.

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This topic requires compensation expense to be recognized such that compensation expense is recorded only for those awards expected to vest.

As a result, we periodically review the amount of actual forfeitures and record any adjustments deemed necessary each reporting period.

As a result, we periodically review the number of actual forfeitures and record any adjustments deemed necessary each reporting period.

We also recognize excess tax benefits in our provision for income taxes.

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We recognize amounts related to grants as a reduction of expense in the period in which the related costs for which the grants are intended to compensate are recognized and we are reasonably assured to receive payment.

On April 11, 2020, the Canadian Government enacted the Canada Emergency Wage Subsidy ("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, 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.

Research and Development

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Costs related to contracts with customers for customer-sponsored research and development projects are included as a contract cost in Cost of operations whereby we recognize revenue, consistent with our revenue recognition policies.

Additionally, we may enter into cost-sharing arrangements with our customers to enhance our internal development capabilities and offset a portion of the costs incurred related to these development efforts.

Additionally, we may enter into cost-sharing arrangements with our

customers to enhance our internal development capabilities and offset a portion of the costs incurred related to these development efforts.

Research and development activities totaled $ 53.0 million, $ 45.4 million and $ 31.4 million in the years ended December 31, 2023, 2022 and 2021, respectively.

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We have computed earnings per common share on the basis of the weighted-average number of common shares, and, where dilutive, common share equivalents, outstanding during the indicated periods.

We issue a number of forms of stock-based compensation periodically, including incentive and non-qualified stock options, restricted stock, restricted stock units, performance shares and performance units, subject to satisfaction of specific performance goals.

We periodically issue a number of forms of stock-based compensation, including incentive and non-qualified stock options, restricted stock, restricted stock units, performance shares and performance units, subject to satisfaction of specific performance goals.

We include the shares applicable to these plans in our computation of diluted earnings per share when related performance criteria have been met.

10 unchanged sentences

$ 81,615 $ 40,990

Our investment portfolio consists primarily of U.S.

Government securities, corporate bonds and mutual funds.

Our debt securities are carried at fair value and are either classified as trading, with unrealized gains and losses reported in earnings, or as available-for-sale, with the unrealized gains and losses, net of tax, reported as a component of Accumulated other comprehensive income.

Our investment portfolio consists primarily of corporate bonds and mutual funds.

Our equity securities are carried at fair value with the unrealized gains and losses reported in earnings.

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We perform testing of goodwill for impairment annually or more frequently whenever events or circumstances indicate the carrying value of goodwill may be impaired.

During the year ended December 31, 2023, we changed our annual goodwill impairment test date from September 30 to November 15.

This is a change in method of applying an accounting principle which we believe

is a preferable alternative as the new date of assessment is more closely aligned with the approval of our fourth quarter forecast and includes the most recent financial information available.

We may elect to perform a qualitative test when we believe that there is sufficient excess fair value over carrying value based on our most recent quantitative assessment, adjusted for relevant events and circumstances that could affect fair value during the current year.

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Balance at December 31, 2021 $ 155,939 $ 129,563 $ 285,502

Acquisition (Note 2) 16,609 — 16,609

Translation ( 461 ) ( 8,485 ) ( 8,946 )

Balance at December 31, 2022 $ 172,087 $ 121,078 $ 293,165

Acquisitions (Note 2) 16,609 — 16,609

Purchase price adjustment 588 — 588

Translation 578 2,689 3,267

42 unchanged sentences

Amortization expense ( 11,396 ) ( 10,901 ) ( 9,329 )

Translation and other (1)

( 9,538 ) 2,129 2,003

Translation 3,294 ( 9,538 ) 2,129

Balance at end of period $ 185,510 $ 193,612 $ 185,551

(1) Includes $( 0.6 ) million related to the divestiture of the U.S.-based commercial nuclear services business during the year ended December 31, 2020.

Estimated amortization expense for the next five fiscal years is as follows (amounts in thousands):

3 unchanged sentences

2026 $ 10,371

2026 $ 10,147

We lease certain manufacturing facilities, office space and equipment under operating leases with terms of one to 20 years.

Certain of the leases include options to renew for periods of one to 10 years.

We include lease options in our determination of the right-of-use asset and lease liability if it is reasonably certain that we will exercise one or more of the options.

We include lease options in our

determination of the right-of-use asset and lease liability if it is reasonably certain that we will exercise one or more of the options.

Leases with initial terms of 12 months or less are excluded from our right-of-use assets and lease liabilities.

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Interest expense ( 2,048 ) ( 1,975 ) ( 6,411 )

( 1,975 ) ( 6,411 ) ( 2,540 )

Balance at end of period $ 9,078 $ 11,126 $ 10,696

(1) Includes the recognition of prior deferred debt issuance costs associated with former debt instruments of $( 4.2 ) million and $( 0.7 ) million for the years ended December 31, 2021 and 2020, respectively.

Pension Plans and Postretirement Benefits

2 unchanged sentences

We utilize actuarial valuations to calculate the cost and benefit obligations of our pension and postretirement benefits.

The actuarial valuations utilize significant assumptions in the determination of our benefit cost and obligations, including assumptions regarding discount rates, expected returns on plan assets, mortality and health care cost trends.

The actuarial valuations utilize significant assumptions in the determination of our benefit cost and

obligations, including assumptions regarding discount rates, expected rate of return on plan assets, mortality and health care cost trends.

We determine our discount rate based on a yield curve comprising rates of return on high-quality, fixed-income investments currently available and expected to be available during the period to maturity of our pension and postretirement benefit plan obligations.

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Substantially all of our asset retirement obligations relate to the remediation of our nuclear analytical laboratory at our facility in Lynchburg, Virginia and the Nuclear Fuel Services, Inc.

("NFS") facility in our Government Operations segment as well as certain facilities in our Commercial Operations segment.

("NFS") facility in Erwin, Tennessee in our Government Operations segment as well as certain facilities in our Commercial Operations segment.

The following summarizes the changes in the carrying amount of these liabilities:

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Consequently, it is possible future earnings could be affected by changes in our assessments of the probability that a loss has been incurred in a material pending litigation against us and/or changes in our estimates related to such matters.

Accumulated Other Comprehensive Income

The components of Accumulated other comprehensive income included in Stockholders' Equity are as follows:

Accumulated Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive income (loss) included in Stockholders' Equity are as follows:

(In thousands)

Currency translation adjustments $ 8,669 $ ( 4,207 )

Net unrealized gain (loss) on derivative financial instruments 105 ( 694 )

Net unrealized gain on derivative financial instruments 558 105

Unrecognized prior service cost on benefit obligations ( 16,917 ) ( 17,955 )

Net unrealized gain on available-for-sale investments 227 127

Accumulated other comprehensive income $ ( 21,930 ) $ 12,143

The amounts reclassified out of Accumulated other comprehensive income by component and the affected consolidated statements of income line items are as follows:

Accumulated other comprehensive income (loss) $ ( 7,463 ) $ ( 21,930 )

The amounts reclassified out of Accumulated other comprehensive income (loss) by component and the affected consolidated statements of income line items are as follows:

Year Ended December 31,

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dollars at current exchange rates, and we translate income statement items at average exchange rates for the periods presented.

We record adjustments resulting from the translation of foreign currency financial statements as a component of Accumulated other comprehensive income.

We record adjustments resulting from the translation of foreign currency financial statements as a component of Accumulated other comprehensive income (loss).

We report foreign currency transaction gains and losses in income.

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We record these contracts at fair value on our consolidated balance sheets.

Based on the hedge designation at inception of the contract, the related gains and losses on these contracts are deferred in stockholders' equity as a component of Accumulated other comprehensive income until the hedged item is recognized in earnings.

The gain or loss on a derivative instrument not designated as a hedging instrument is immediately recognized in earnings.

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New Accounting Standards

In October 2021, the FASB issued an update to the Topic Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers .

This update requires entities to recognize and measure contract assets and liabilities acquired in a business combination in accordance with FASB Topic Revenue from Contracts with Customers .

The update will generally result in an entity recognizing contract assets and liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value.

The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted.

We are currently evaluating the impact, if any, of the adoption of this standard on our financial statements.

In November 2023, the FASB issued updates to FASB Topic Segment Reporting to improve disclosures about a public company's reportable segments and address requests from investors to provide additional, more detailed information about a reportable segment’s expenses on an interim and annual basis and provide in interim periods all disclosures currently only required on an annual basis.

Additionally, it requires a public entity to disclose the title and position of the Company’s Chief Operating Decision Maker.

These updates do not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments.

The new standard is effective for interim and annual periods beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact of the adoption of this standard and expect that it will only require changes to our disclosures with no impact on our results of operations, financial position or cash flows.

In December 2023, the FASB issued updates to FASB Topic Income Taxes to provide, on an annual basis, disaggregated disclosures with respect to the reconciliation of our effective tax rate, as well as a disaggregation of income taxes paid, net of refunds received.

The new standard is effective on a prospective basis for annual periods beginning after December 15, 2024, with early adoption permitted.

NOTE 2 – ACQUISITIONS AND DIVESTITURES

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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"), for approximately $ 49.9 million.

Our preliminary purchase price allocation resulted in the recognition of $ 28.5 million of Intangible Assets, $ 6.4 million of inventory and $ 16.6 million of Goodwill.

Adjustments to our initial purchase price allocation include a reduction to intangible assets of $ 1.1 million with an offsetting increase to goodwill and a reduction of inventory of $ 2.0 million with an offsetting increase to Contracts in progress.

Our final purchase price allocation resulted in the recognition of $ 28.5 million of Intangible Assets, $ 7.2 million of inventory and $ 17.2 million of Goodwill.

In addition, we recognized right-of-use assets and lease liabilities of $ 7.2 million.

The assets acquired and liabilities assumed have been recorded at preliminary estimates of fair value as determined by management, based on information currently available and on current assumptions of future operations, and are subject to change upon completion of acquisition accounting.

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.

5 unchanged sentences

Unpatented technology $ 4,200 8 years

Acquisition of Laker Energy Products Ltd.

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

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

("Precision Manufacturing"), for CAD 23.3 million ($ 17.8 million U.S.

dollar equivalent).

We were subject to the payment of contingent consideration of which we had recognized CAD 2.5 million as a component of the purchase price.

Our purchase price allocation resulted in the recognition of $ 8.4 million of Property, Plant and Equipment, Net, $ 8.2 million of Intangible Assets and $ 5.8 million of Goodwill.

In addition, we recognized right-of-use assets and lease liabilities of $ 2.7 million.

During the year ended December 31, 2021, we entered into an agreement with the seller resulting in no contingent consideration due and recognized a gain of $ 2.0 million (CAD 2.5 million) as a component of Cost of operations.

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.

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 Government Operations segment.

NOTE 3 – REVENUE RECOGNITION

1 unchanged sentence

Government Operations

Our Government Operations segment recognizes revenue over time for the manufacturing of naval nuclear reactor components and fuel, submarine missile launch tubes, the downblending of high-enriched uranium and for the development of advanced nuclear reactors for power and propulsion applications.

Our Government Operations segment recognizes revenue over time for the manufacturing of naval nuclear reactor components and fuel, the downblending of high-enriched uranium and for the development of advanced nuclear reactors for power and propulsion applications.

Certain of our contracts contain two or more different types of components, each of which we identify as a separate performance obligation.

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The amount of the variable consideration to which we are entitled is dependent on our actual costs incurred on the performance obligation compared to the target costs for that performance obligation and subject to incentive price revisions included within the contracts.

We include these incentive fees in revenue when there is sufficient evidence to determine that the variable consideration is not constrained.

We include these incentive fees in revenue when there is sufficient evidence to determine that the variable

consideration is not constrained.

The remaining contracts typically have immaterial amounts of variable consideration and have a single performance obligation.

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Changes in these estimates result in the recognition of cumulative catch-up adjustments that impact our revenues and/or costs of contracts.

During the years ended December 31, 2022, 2021 and 2020, we recognized net favorable changes in estimates that resulted in increases in revenues of $ 26.6 million, $ 30.7 million and $ 44.9 million, respectively, as well as increases (decreases) in cost of operations of $ 2.2 million, $ 4.2 million and $ 2.1 million, respectively.

Included in these amounts are contract adjustments for cost overruns related to the manufacture of non-nuclear components being produced within our Government Operations segment.

We recognized a decrease in operating income of $ 11.3 million for the year ended December 31, 2022 related to this matter.

These contract adjustments resulted in a decrease in earnings per share of $ 0.09 for the year ended December 31, 2022.

We are pursuing recovery of cost overruns related to this project.

The aggregate impact of changes in estimates increased our revenue and operating income as follows:

Year Ended December 31,

2023 2022 2021

(In thousands)

Revenues $ 24,728 $ 26,629 $ 30,719

Operating Income (1)

$ 24,813 $ 24,405 $ 26,540

(1) During the year ended December 31, 2023, our Government Operations segment results were favorably impacted by contract adjustments related to a nuclear operations contract which resulted in an increase in operating income of $ 22.5 million.

Our Government Operations segment also recognized favorable adjustments totaling $ 27.9 million as a result of the successful negotiation of change orders related to cost growth that was driven by out-of-scope changes associated with the manufacture of non-nuclear components.

During the year ended December 31, 2022, our Government Operations segment results were negatively affected by contract adjustments for cost growth related to the manufacture of non-nuclear components which resulted in a decrease in operating income of $ 11.3 million.

During the year ended December 31, 2021, no adjustment to any one contract had a material impact on our consolidated financial statements.

Contract Assets and Liabilities

We include revenues and related costs incurred, plus accumulated contract costs that exceed amounts invoiced to customers under the terms of the contracts, in Contracts in progress.

Costs specific to certain contracts for which we recognize revenue at a point in time are also included in Contracts in progress.

We include in Advance billings on contracts billings that exceed accumulated contract costs and revenues and costs recognized over time.

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Changes in Contracts in progress and Advance billings on contracts are primarily driven by differences in the timing of revenue recognition and billings to our customers.

During the year ended December 31, 2022, our unbilled receivables decreased $ 7.4 million primarily as a result of decreases in cost in excess of billings on our fixed-price incentive fee contracts within our Government Operations segment, partially offset by increases due to the timing of milestone billings on certain firm-fixed-price contracts within our Government Operations and Commercial Operations segments.

During the year ended December 31, 2022, our Advance billings on contracts decreased $ 22.9 million primarily as a result of revenue recognized in excess of billings on certain firm-fixed-price contracts within our Government Operations segment.

During the year ended December 31, 2023, our unbilled receivables decreased $ 1.4 million primarily as a result of decreases in cost in excess of billings on our fixed-price incentive fee contracts and the timing of milestone billings on certain firm-fixed-price contracts within our Government Operations segment, partially offset by increases due to the timing of milestone billings on firm-fixed-price contracts within our Commercial Operations segments.

During the year ended December 31, 2023, our Advance billings on contracts increased $ 18.7 million primarily as a result of revenue recognized in excess of billings on certain firm-fixed-price contracts within our Government Operations segment.

Our fixed-price incentive fee contracts for our Government Operations segment include provisions that result in an increase in retainages on contracts during the first and third quarters of the year, with larger payments made during the second and fourth quarters.

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Retainages $ 55,181 $ 48,566

$ 48,566 $ 51,507

Advance billings on contracts $ 107,391 $ 88,726

(1) At December 31, 2021, we also had noncurrent retainages of $ 1.3 million included in Other Assets.

During the years ended December 31, 2023 and 2022, we recognized $ 70.8 million and $ 91.9 million of revenue that was in Advance billings on contracts at the beginning of each year, respectively.

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Total Assets $ 557,297 $ 566,521

Current liabilities $ 292,081 $ 284,821

Total Liabilities $ 307,562 $ 292,081

Owners' equity 249,735 274,440

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This variation, along with the changes in our mix of income within these jurisdictions, can contribute to shifts in our effective tax rate from period to period.

We are not currently under audit by any of the various state authorities, and we do not have any returns under examination for years prior to 2017.

We are currently under audit by various state and international authorities, and we do not have any returns under examination for years prior to 2017.

We apply the provisions of FASB Topic Income Taxes regarding the treatment of uncertain tax positions.

A reconciliation of unrecognized tax benefits (exclusive of interest and federal and state benefits) is as follows:

Year Ended December 31,

2022 2021 2020

(In thousands)

Balance at beginning of period $ — $ 5,852 $ 3,899

Increases based on tax positions taken in the current year — 964 2,075

Increases based on tax positions taken in the prior years — — —

Decreases based on tax positions taken in the prior years — — —

Decreases due to settlements with tax authorities — ( 6,775 ) —

Decreases due to lapse of applicable statute of limitation — ( 41 ) ( 123 )

Other, net — — 1

Balance at end of period $ — $ — $ 5,852

As of December 31, 2023 and 2022, we had no uncertain tax positions.

Beginning in 2024, certain jurisdictions will implement the Organization for Economic Cooperation and Development's (OECD) Pillar Two rules regarding a 15% global minimum tax.

Considering our current global footprint, we do not anticipate that these new rules will materially impact our provision for income taxes.

Deferred income taxes reflect the net tax effects of temporary differences between the financial and tax bases of assets and liabilities.

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Right-of-use lease assets 11,550 12,246

Accrued liabilities for self-insurance (including postretirement health care benefits) 341 —

Intangibles 21,976 22,404

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Credit Facility 418,750 500,000

Former Credit Facility — 400,000

Amounts due within one year 6,250 6,250

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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.

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

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, 2023, we were in compliance with all covenants set forth in the Credit Facility.

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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.

Based on the total net leverage ratio applicable at December 31, 2023, 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 %.

As of December 31, 2023, borrowings under our Term Loan totaled $ 243.8 million, borrowings and letters of credit issued under the Revolving Credit Facility totaled $ 175.0 million and $ 1.7 million, respectively, and we had $ 573.3 million available under the Revolving Credit Facility for borrowings and to meet letter of credit requirements.

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

Under the Credit Facility, (1) if an event of default relating to bankruptcy or other insolvency events occurs with respect to the Company, all related obligations will immediately become due and payable;

Under the Credit Facility, (1) if an event of default relating to bankruptcy or other insolvency events occur with respect to the Company, all related obligations will immediately become due and payable;

(2) if any other event of default exists, the lenders will be permitted to accelerate the maturity of the related obligations outstanding;

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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.

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.

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.

The 2020 Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the 2020 Indenture or the Senior Notes due 2028 and certain provisions related to bankruptcy events.

related to bankruptcy events.

The 2020 Indenture also contains customary negative covenants.

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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.

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 letter of credit 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.

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As a result, we recognized pension settlement-related charges of $ 12.6 million during the year ended December 31, 2022.

In December 2021, we purchased a group annuity contract that transferred certain foreign hourly pension benefit obligations of approximately $ 38.3 million to an insurance company for approximately 400 retirees.

Additional Information

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$ ( 2,161 ) $ ( 3,100 ) $ — $ ( 261 )

In the current fiscal year, we have recognized expense (income) in other comprehensive income as a component of net periodic benefit cost of approximately $ 3.3 million and $ 0.0 million for our pension benefits and other benefits, respectively.

In the current fiscal year, we have recognized expense in other comprehensive income as a component of net periodic benefit cost of approximately $ 3.2 million and $ 0.0 million for our pension benefits and other benefits, respectively.

Pension Benefits Other Benefits

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Bargaining Unit Employees' Pension Plan.

We also sponsored the BWXT Canada Ltd.

Salaried Non-Union Employees' Retirement Plan until its wind-up in November 2022.

The following is a summary of the asset allocations of these plans at December 31, 2022 and 2021 by asset category:

The following is a summary of the asset allocations of this plan at December 31, 2023 and 2022 by asset category:

Asset Category:

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Real Estate 132,867 — — — 132,867

Investment Contract (1)

46,817 — — 46,817 —

Partnerships with Security Holdings 25,259 — — — 25,259

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Total Assets $ 921,307 $ 383,738 $ — $ — $ 537,569

(1) During 2021, we filed for regulatory approval for the wind-up of our foreign salaried pension benefit plan.

Based on those participants who elected to receive annuities upon retirement, we purchased a group annuity contract totaling $ 45.6 million.

The wind-up of this plan was completed in 2022.

(1) Includes items that are not required to be categorized in the fair value hierarchy in order to permit reconciliation of the fair value hierarchy to the fair value of plan assets presented in the Obligations and Funded Status table.

The following is a summary of the changes in the Plans' Level 3 instruments for the years ended December 31, 2022 and 2021:

The following is a summary of the changes in the Plans' Level 3 instruments for the year ended December 31, 2022.

The Plan did not have any Level 3 instruments during the year ended December 31, 2023.

Year Ended December 31,

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Balance at beginning of period $ 46,817

Purchases — 45,645

Dispositions ( 35,822 )

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We also provide service-based cash contributions under the Thrift Plan to employees not accruing benefits under our defined benefit plans.

Our Canadian plans also include a defined contribution component whereby we make cash, service-based contributions.

Our Canadian plan also includes a defined contribution component whereby we make cash, service-based contributions.

Amounts charged to expense for employer contributions under our defined contribution plans totaled approximately $ 41.5 million, $ 37.6 million and $ 37.5 million in the years ended December 31, 2023, 2022 and 2021, respectively.

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On April 30, 2021, our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock at an aggregate market value of up to $ 500 million with no expiration date.

In the year ended December 31, 2022, we repurchased 374,568 shares of our common stock for $ 20.0 million.

In the year ended December 31, 2021, we repurchased 4,134,767 shares of our common stock for $ 225.8 million.

In the year ended December 31, 2020, we repurchased 338,521 shares of our common stock for $ 22.0 million.

In the year ended December 31, 2023, we did no t repurchase any shares of our common stock from public market transactions.

In the year ended December 31, 2022, we repurchased 374,568 shares of our common stock from public market transactions for $ 20.0 million.

In the year ended December 31, 2021, we repurchased 4,134,767 shares of our common stock from public market transactions for $ 225.8 million.

As of December 31, 2023, we had approximately $ 397.6 million available to us for share repurchase under the $ 500 million authorization described above.

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Price Weighted-

Term Aggregate

(In Years) Aggregate

(In millions)

Outstanding at beginning of period 90 $ 23.62

Granted — N/A

Granted 150 $ 61.73

Exercised ( 56 ) $ 23.62

Cancelled/expired/forfeited — N/A

Outstanding at end of period 90 $ 23.62 2.0 years $ 3.1

Exercisable at end of period 90 $ 23.62 2.0 years $ 3.1

Cancelled/expired/forfeited ( 1 ) $ 16.46

Outstanding at end of period 183 $ 54.73 7.7 $ 4.0

Exercisable at end of period 34 $ 23.62 1.2 $ 1.8

The aggregate intrinsic value included in the table above represents the total pre-tax intrinsic value that would have been received by the option holders had all option holders exercised their options on December 31, 2023.

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The actual tax benefits realized related to the stock options exercised during the year ended December 31, 2023 totaled $ 0.7 million.

Restricted Stock Units

Nonvested restricted stock units as of December 31, 2023 and changes during the year ended December 31, 2023 were as follows (share data in thousands):

Shares Weighted-

Nonvested at beginning of period 242 $ 50.79

Granted 119 $ 63.59

Vested ( 131 ) $ 54.33

Cancelled/forfeited ( 7 ) $ 54.10

Nonvested at end of period 223 $ 55.47

The actual tax benefits realized related to the restricted stock units vested during the year ended December 31, 2023 totaled $ 1.5 million.

Performance Shares

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The actual tax benefits realized related to the performance shares vested during the year ended December 31, 2023 totaled $ 1.9 million.

Restricted Stock Units

Nonvested restricted stock units as of December 31, 2022 and changes during the year ended December 31, 2022 were as follows (share data in thousands):

Shares Weighted-

Nonvested at beginning of period 221 $ 57.66

Granted 191 $ 46.33

Vested ( 124 ) $ 55.49

Cancelled/forfeited ( 46 ) $ 52.59

Nonvested at end of period 242 $ 50.79

The actual tax benefits realized related to the restricted stock units vested during the year ended December 31, 2022 totaled $ 1.3 million.

Cash-Settled Stock Appreciation Rights

The following table summarizes activity for our stock appreciation rights for the year ended December 31, 2022 (unit data in thousands):

Units Weighted-

Price Weighted-

Term Aggregate

(In millions)

Outstanding at beginning of period 27 $ 23.62

Granted — N/A

Exercised ( 10 ) $ 23.62

Cancelled/expired/forfeited — N/A

Outstanding at end of period 17 $ 23.62 2.2 years $ 0.6

Exercisable at end of period 17 $ 23.62 2.2 years $ 0.6

The aggregate intrinsic value included in the table above represents the total pre-tax intrinsic value that would have been received by the stock appreciation rights holders had all holders exercised their rights on December 31, 2022.

The intrinsic value is calculated as the total number of stock appreciation rights multiplied by the difference between the closing price of our common stock on the last trading day of the period and the exercise price of the stock appreciation rights.

This amount changes based on the price of our common stock.

As of December 31, 2023, we had 9,890 exercisable stock appreciation rights valued at $ 23.62 per unit with an aggregate intrinsic value of $ 0.5 million and a weighted average remaining contractual term of 1.2 years.

Cash-Settled Restricted Stock Units

As of December 31, 2023, we had 1,249 nonvested units valued at $ 76.63 per share.

The fair value is based on our closing stock price as of December 31, 2023 and is re-determined at the end of each reporting period for purposes of remeasuring compensation expense associated with these cash-settled awards.

Cash-Settled Performance Units

3 unchanged sentences

Cash-Settled Restricted Stock Units

As of December 31, 2022, we had 2,394 nonvested units valued at $ 58.08 per share.

The fair value is based on our closing stock price as of December 31, 2022 and is re-determined at the end of each reporting period for purposes of remeasuring compensation expense associated with these cash-settled awards.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

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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.

Increases in costs on our fixed-price contracts could have a material adverse impact on our consolidated financial condition, results of operations and cash flows.

Increases in costs on our fixed-price contracts could have a material adverse impact on our consolidated financial condition,

results of operations and cash flows.

Alternatively, reductions in overall contract costs at completion could materially improve our consolidated financial condition, results of operations and cash flows.

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We believe that our provision for possible losses on uncollectable accounts receivable is adequate for our credit loss exposure.

At December 31, 2022 and 2021, the allowances for possible losses that we deducted from Accounts receivable – trade, net on our consolidated balance sheets were $ 0.2 million.

At December 31, 2023 and 2022, the allowances for possible losses that we deducted from Accounts receivable – trade, net on our consolidated balance sheets were $ 0.3 million and $ 0.2 million, respectively.

NOTE 13 – INVESTMENTS

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Available-for-sale securities

Government and agency securities

3,247 10 ( 4 ) 3,253

Corporate bonds

1,479 304 — 1,783

Asset-backed securities and collateralized mortgage obligations

$ 8,481 $ 1,015 $ — $ 9,496

$ 11,735 $ 246 $ ( 80 ) $ 11,901

The following is a summary of our investments at December 31, 2022:

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The following sections describe the valuation methodologies we use to measure the fair values of our investments, derivatives and nonrecurring fair value measurements.

Investments primarily include U.S.

Government securities, corporate bonds and mutual funds.

Investments primarily include corporate bonds and mutual funds.

In general, and where applicable, we principally use a composite of observable prices and quoted prices in active markets for identical assets or liabilities to determine fair value.

7 unchanged sentences

Available-for-sale securities

Government and agency securities

3,253 3,253 — — —

Corporate bonds

1,783 1,783 — — —

Asset-backed securities and collateralized mortgage obligations

$ 9,496 $ 1,783 $ 7,713 $ — $ —

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The fair value of our remaining debt instruments approximated their carrying values at December 31, 2023 and 2022.

Note receivable.

Included in Other Assets is a note receivable related to a third-party loan.

We base the fair value of this level 2 note receivable instrument on the present value of future cash flows discounted at market interest rates for financial instruments with similar quality and terms.

At December 31, 2023, the carrying value of our note receivable was $7.4 million and approximated its fair value.

NOTE 15 – SEGMENT REPORTING

3 unchanged sentences

Reportable segments are measured based on operating income exclusive of general corporate expenses and gains (losses) on sales of corporate assets.

Information about Operations in our Different Industry Segments:

Information about our Segments:

Year Ended December 31,

5 unchanged sentences

$ 2,496,309 $ 2,232,834 $ 2,124,074

$ 2,232,834 $ 2,124,074 $ 2,123,516

(1) Segment revenues are net of the following intersegment transfers:

Government Operations Transfers $ ( 2,941 ) $ ( 7,327 ) $ ( 10,327 )

Commercial Operations Transfers ( 66 ) ( 778 ) ( 553 )

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

OPERATING INCOME:

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Nuclear Components and Fuel $ 1,610,183 $ 1,494,810 $ 1,481,416

Downblending and Nuclear Services 233,197 198,420 207,221

Uranium Processing and Nuclear Services 276,690 233,197 198,420

Advanced Reactor Design and Engineering 144,464 80,476 45,261

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(1) Includes equity in income of investees.

In the quarter ended December 31, 2023, we recognized favorable contract adjustments totaling $ 27.9 million as a result of the successful negotiation of change orders related to cost growth that was driven by out-of-scope changes associated with the manufacture of non-nuclear components.

In the quarter ended September 30, 2023, we recognized $ 22.5 million of favorable contract adjustments related to a nuclear operations contract.

In the quarter ended June 30, 2022, we recognized an unfavorable contract adjustment of $ 11.3 million related to the manufacture of non-nuclear components.

In the quarter ended September 30, 2021, we recognized an early redemption premium of $ 10.8 million and wrote-off deferred debt issuance costs totaling $ 4.2 million.

We immediately recognize actuarial gains (losses) for our pension and postretirement benefit plans in earnings as a component of net periodic benefit cost.

26 unchanged sentences

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 8. Financial Statements and Supplementary Data