BWX Technologies, Inc. 10-K/A

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of BWX Technologies, Inc.: Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of BWX Technologies, Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Over Time Revenue Recognition – Estimating Costs at Completion – Refer to Note 1 and Note 3 to the Financial Statements Critical Audit Matter Description The Company generally recognizes contract revenue and related costs over time for individual performance obligations based on a cost-to-cost method in accordance with Financial Accounting Standards Board Topic Revenue from Contracts with Customers . The Company recognizes estimated contract revenue and resulting income based on the measurement of the extent of progress toward completion as a percentage of the total project. The Company reviews contract price and cost estimates periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. The accounting for these contracts involves judgment, particularly as it relates to the process of estimating total costs to complete the performance obligation. Given the significance of revenue and the level of judgment involved in estimating total costs to complete the performance obligations used to recognize revenue for long-term contracts, auditing such estimates involved especially subjective judgment. 44 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to revenue recognized over time, including management’s estimates of total contract costs to complete its performance obligations, included the following, among others: • 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, recorded in the appropriate period, and for the appropriate amount. • We analyzed contracts with customers recognized over time to identify whether there are contracts with characteristics of audit interest. For a contract determined to exhibit characteristics of audit interest, we performed the following testing: ◦ Read the contract to understand the contract terms and the accounting treatment in accordance with generally accepted accounting principles. ◦ 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 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 Charlotte, North Carolina February 24, 2025 We have served as the Company's auditor since 2009. 45 Table of Contents BWX TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, 2024 2023 2022 (In thousands, except share and per share amounts) Revenues $ 2,703,654 $ 2,496,309 $ 2,232,834 Costs and Expenses: Cost of operations 2,048,447 1,875,716 1,680,899 Research and development costs 7,478 7,613 9,535 Losses on asset disposals and impairments, net 4,390 1,034 5,520 Selling, general and administrative expenses 318,663 279,694 234,282 Total Costs and Expenses 2,378,978 2,164,057 1,930,236 Equity in Income of Investees 55,931 50,807 45,973 Operating Income 380,607 383,059 348,571 Other Income (Expense): Interest income 2,554 2,359 758 Interest expense (39,475) (47,036) (36,410) Other – net 5,034 (16,982) 1,458 Total Other Income (Expense) (31,887) (61,659) (34,194) Income before Provision for Income Taxes 348,720 321,400 314,377 Provision for Income Taxes 66,422 75,079 75,757 Net Income $ 282,298 $ 246,321 $ 238,620 Net Income Attributable to Noncontrolling Interest (357) (472) (429) Net Income Attributable to BWX Technologies, Inc. $ 281,941 $ 245,849 $ 238,191 Earnings per Common Share: Basic: Net Income Attributable to BWX Technologies, Inc. $ 3.08 $ 2.68 $ 2.60 Diluted: Net Income Attributable to BWX Technologies, Inc. $ 3.07 $ 2.68 $ 2.60 Shares used in the computation of earnings per share (Note 17): Basic 91,572,674 91,619,156 91,447,088 Diluted 91,859,732 91,874,537 91,702,111 See accompanying notes to consolidated financial statements. 46 Table of Contents BWX TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, 2024 2023 2022 (In thousands) Net Income $ 282,298 $ 246,321 $ 238,620 Other Comprehensive Income (Loss): Currency translation adjustments (42,404) 12,876 (34,834) Derivative financial instruments: Unrealized gains arising during the period, net of tax provision of $(213), $(247) and $(89), respectively 667 717 267 Reclassification adjustment for (gains) losses included in net income, net of tax provision (benefit) of $245, $91 and $(181), respectively (734) (264) 532 Benefit obligations: Unrecognized losses arising during the period, net of tax benefit of $9, $530 and $802, respectively (1,297) (1,631) (2,559) Recognition of benefit plan costs, net of tax benefit of $(344), $(609) and $(657), respectively 2,981 2,669 2,626 Investments: Unrealized gains (losses) arising during the period, net of tax (provision) benefit of $(11), $(27) and $28, respectively 39 100 (105) Other Comprehensive Income (Loss) (40,748) 14,467 (34,073) Total Comprehensive Income 241,550 260,788 204,547 Comprehensive Income Attributable to Noncontrolling Interest (357) (472) (429) Comprehensive Income Attributable to BWX Technologies, Inc. $ 241,193 $ 260,316 $ 204,118 See accompanying notes to consolidated financial statements. 47 Table of Contents BWX TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS ASSETS December 31, 2024 2023 (In thousands) Current Assets: Cash and cash equivalents $ 74,109 $ 75,766 Restricted cash and cash equivalents 2,785 2,858 Accounts receivable – trade, net 99,112 70,180 Accounts receivable – other 53,199 16,339 Retainages 33,667 55,181 Contracts in progress 577,745 533,155 Other current assets 89,380 64,322 Total Current Assets 929,997 817,801 Property, Plant and Equipment, Net 1,278,161 1,228,520 Investments 10,609 9,496 Goodwill 287,362 297,020 Deferred Income Taxes 6,569 16,332 Investments in Unconsolidated Affiliates 99,403 88,608 Intangible Assets 165,325 185,510 Other Assets 92,498 103,778 TOTAL $ 2,869,924 $ 2,747,065 See accompanying notes to consolidated financial statements. 48 Table of Contents BWX TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY December 31, 2024 2023 (In thousands, except share and per share amounts) Current Liabilities: Current maturities of long-term debt $ 12,500 $ 6,250 Accounts payable 158,077 126,651 Accrued employee benefits 77,234 64,544 Accrued liabilities – other 65,100 70,210 Advance billings on contracts 161,290 107,391 Total Current Liabilities 474,201 375,046 Long-Term Debt 1,042,970 1,203,422 Accumulated Postretirement Benefit Obligation 16,515 18,466 Environmental Liabilities 94,225 90,575 Pension Liability 82,602 82,786 Other Liabilities 79,007 43,469 Commitments and Contingencies (Note 10) Stockholders' Equity: Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 128,320,295 and 128,065,521 shares at December 31, 2024 and 2023, respectively 1,283 1,281 Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; no shares issued — — Capital in excess of par value 228,889 206,478 Retained earnings 2,287,151 2,093,917 Treasury stock at cost, 36,869,498 and 36,537,695 shares at December 31, 2024 and 2023, respectively (1,388,432) (1,360,862) Accumulated other comprehensive income (loss) (48,211) (7,463) Stockholders' Equity – BWX Technologies, Inc. 1,080,680 933,351 Noncontrolling interest (276) (50) Total Stockholders' Equity 1,080,404 933,301 TOTAL $ 2,869,924 $ 2,747,065 See accompanying notes to consolidated financial statements. 49 Table of Contents BWX TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock Capital In Excess of Par Value Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Stockholders' Equity Noncontrolling Interest Total Stockholders' Equity Shares Par Value (In thousands, except share and per share amounts) Balance December 31, 2021 127,311,985 $ 1,273 $ 174,288 $ 1,775,751 $ 12,143 $ (1,326,280) $ 637,175 $ 60 $ 637,235 Net income — — — 238,191 — — 238,191 429 238,620 Dividends declared ($0.88 per share) — — — (80,972) — — (80,972) — (80,972) Currency translation adjustments — — — — (34,834) — (34,834) — (34,834) Derivative financial instruments — — — — 799 — 799 — 799 Defined benefit obligations — — — — 67 — 67 — 67 Available-for-sale investments — — — — (105) — (105) — (105) Exercises of stock options 35,878 — 852 — — — 852 — 852 Shares placed in treasury — — — — — (26,990) (26,990) — (26,990) Stock-based compensation charges 323,893 4 14,123 — — — 14,127 — 14,127 Distributions to noncontrolling interests — — — — — — — (444) (444) Balance December 31, 2022 127,671,756 $ 1,277 $ 189,263 $ 1,932,970 $ (21,930) $ (1,353,270) $ 748,310 $ 45 $ 748,355 Net income — — — 245,849 — — 245,849 472 246,321 Dividends declared ($0.92 per share) — — — (84,902) — — (84,902) — (84,902) Currency translation adjustments — — — — 12,876 — 12,876 — 12,876 Derivative financial instruments — — — — 453 — 453 — 453 Defined benefit obligations — — — — 1,038 — 1,038 — 1,038 Available-for-sale investments — — — — 100 — 100 — 100 Exercises of stock options 56,005 2 1,321 — — — 1,323 — 1,323 Shares placed in treasury — — — — — (7,592) (7,592) — (7,592) Stock-based compensation charges 337,760 2 15,894 — — — 15,896 — 15,896 Distributions to noncontrolling interests — — — — — — — (567) (567) Balance December 31, 2023 128,065,521 $ 1,281 $ 206,478 $ 2,093,917 $ (7,463) $ (1,360,862) $ 933,351 $ (50) $ 933,301 Net income — — — 281,941 — — 281,941 357 282,298 Dividends declared ($0.96 per share) — — — (88,707) — — (88,707) — (88,707) Currency translation adjustments — — — — (42,404) — (42,404) — (42,404) Derivative financial instruments — — — — (68) — (68) — (68) Defined benefit obligations — — — — 1,684 — 1,684 — 1,684 Available-for-sale investments — — — — 40 — 40 — 40 Exercises of stock options 25,243 — 733 — — — 733 — 733 Shares placed in treasury — — — — — (27,570) (27,570) — (27,570) Stock-based compensation charges 229,531 2 21,678 — — — 21,680 — 21,680 Distributions to noncontrolling interests — — — — — — — (583) (583) Balance December 31, 2024 128,320,295 $ 1,283 $ 228,889 $ 2,287,151 $ (48,211) $ (1,388,432) $ 1,080,680 $ (276) $ 1,080,404 See accompanying notes to consolidated financial statements. 50 Table of Contents BWX TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, 2024 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: (In thousands) Net Income $ 282,298 $ 246,321 $ 238,620 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 85,862 78,566 73,842 Income of investees, net of dividends (10,598) 11,130 (3,461) Losses on asset disposals and impairments - net 4,390 1,034 5,520 Provision for deferred taxes 19,845 (5,128) 5,515 Recognition of (gains) losses for pension and postretirement plans 14,147 34,087 49,868 Stock-based compensation expense 21,680 15,896 14,127 Other, net (83) (1,530) 2,175 Changes in assets and liabilities, net of effects from acquisitions: Accounts receivable (47,571) 462 15,167 Accounts payable 34,532 (9,025) (40,495) Retainages 21,514 (6,615) 4,189 Contracts in progress and advance billings on contracts (7,155) 28,868 (38,615) Income taxes 1,650 (4,786) (764) Accrued and other current liabilities 865 (9,754) (18,948) Pension liabilities, accrued postretirement benefit obligations and employee benefits 881 (6,964) (68,535) Other, net (13,829) (8,861) 6,499 NET CASH PROVIDED BY OPERATING ACTIVITIES 408,428 363,701 244,704 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant and equipment (153,647) (151,286) (198,312) Acquisition of businesses — — (47,328) Purchases of securities — (2,343) (3,803) Sales and maturities of securities — 5,996 3,813 Investments, net of return of capital, in equity method investees (197) — (11,450) Other, net (717) (8,009) 844 NET CASH USED IN INVESTING ACTIVITIES (154,561) (155,642) (256,236) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings of long-term debt 456,000 353,100 978,200 Repayments of long-term debt (612,250) (434,350) (878,200) Payment of debt issuance costs — — (2,405) Repurchases of common stock (20,000) — (20,000) Dividends paid to common shareholders (88,349) (84,974) (81,074) Cash paid for shares withheld to satisfy employee taxes (7,570) (7,592) (6,588) Settlements of forward contracts, net 19,591 3,689 24,013 Other, net (207) 756 6 NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (252,785) (169,371) 13,952 EFFECTS OF EXCHANGE RATE CHANGES ON CASH (2,126) 1,937 (1,205) TOTAL (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS (1,044) 40,625 1,215 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 81,615 40,990 39,775 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 80,571 $ 81,615 $ 40,990 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 72,426 $ 63,216 $ 51,343 Income taxes (net of refunds) $ 45,508 $ 84,478 $ 71,755 SCHEDULE OF NON-CASH INVESTING ACTIVITY: Accrued capital expenditures included in accounts payable $ 17,537 $ 7,105 $ 9,588 See accompanying notes to consolidated financial statements. 51 Table of Contents BWX TECHNOLOGIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES We have presented the consolidated financial statements of BWX Technologies, Inc. ("BWXT") in U.S. dollars in accordance with accounting principles generally accepted in the United States ("GAAP"). We use the equity method to account for investments in entities that we do not control, but over which we have the ability to exercise significant influence. We generally refer to these entities as "joint ventures." We have eliminated all intercompany transactions and accounts. We classify assets and liabilities related to long-term contracts as current using the duration of the related contract or program as our operating cycle, which is generally longer than one year. We have recast certain amounts previously reported in our consolidated statements of cash flows to conform to the presentation at December 31, 2024. We present the notes to our consolidated financial statements on the basis of continuing operations, unless otherwise stated. Unless the context otherwise indicates, "we," "us" and "our" mean BWXT and its consolidated subsidiaries. Reportable Segments We operate in two reportable segments: Government Operations and Commercial Operations. Our reportable segments are further described as follows: • Our Government Operations segment manufactures naval nuclear reactors, including the related nuclear fuel, for the U.S. Naval Nuclear Propulsion Program for use in submarines and aircraft carriers. Through this segment, we also fabricate fuel-bearing precision components that range in weight from a few grams to hundreds of tons, manufacture electro-mechanical equipment, perform design, manufacturing, inspection, assembly and testing activities and downblend Cold War-era government stockpiles of high-enriched uranium. In addition, we supply proprietary and sole-source valves, manifolds and fittings to global naval and commercial shipping customers. In-house capabilities also include wet chemistry uranium processing, advanced heat treatment to optimize component material properties and a controlled, clean-room environment with the capacity to assemble railcar-size components. This segment also provides various other services, primarily through joint ventures, to the U.S. Government including nuclear materials management and operation, environmental management and administrative and operating services for various U.S. Government-owned facilities. These services are provided to the U.S. Department of Energy ("DOE"), including the National Nuclear Security Administration, the Office of Nuclear Energy, the Office of Science and the Office of Environmental Management, the Department of Defense and NASA. In addition, this segment also develops technology for advanced nuclear reactors for a variety of power and propulsion applications in the space and terrestrial domains and offers complete advanced nuclear fuel and reactor design and engineering, licensing and manufacturing services for these programs. • Our Commercial Operations segment fabricates commercial nuclear steam generators, nuclear fuel, fuel handling systems, pressure vessels, reactor components, heat exchangers, tooling delivery systems and other auxiliary equipment, including containers for the storage of spent nuclear fuel and other high-level waste and supplies nuclear-grade materials and precisely machined components for nuclear utility customers. 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. 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. This segment also manufactures medical radioisotopes, radiopharmaceuticals and medical devices, and partners with life science and pharmaceutical companies developing new drugs. See Note 15 and Note 3 for financial information about our segments. Recently Adopted Accounting Standards In November 2023, the Financial Accounting Standards Board ("FASB") issued updates to Topic Segment Reporting to improve disclosures about a public company's reportable segments. During the year ended December 31, 2024, we adopted the provisions of this update which are included in Note 15. The revised disclosures include additional, more detailed information 52 Table of Contents about our reportable segment's expenses as well as the title and position of our Chief Operating Decision Maker ("CODM"). These disclosure changes will be included in interim periods beginning in the year ending December 31, 2025. The adoption of these provisions had no impact on our results of operations, financial position or cash flows. Use of Estimates We use estimates and assumptions to prepare our financial statements in conformity with GAAP. Some of our more significant estimates include estimates of costs to complete long-term contracts and the associated revenues, estimates of the fair value of acquired intangible and other assets, estimates we make in selecting assumptions related to the valuations of our pension and postretirement benefit plans, including the selection of our discount rates, mortality and expected rates of return on our pension plan assets and estimates we make in evaluating our asset retirement obligations. These estimates and assumptions affect the amounts we report in our financial statements and accompanying notes. Our actual results could differ from these estimates. Variances could result in a material effect on our financial condition and results of operations in future periods. 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 the 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. Certain costs may be excluded from the cost-to-cost method of measuring progress, such as significant costs for uninstalled materials, if such costs do not depict our performance in transferring control of goods or services to the customer. We review contract price and cost estimates periodically as the work progresses and reflect adjustments proportionate to the percentage-of-completion in income in the period when those estimates are revised. We recognize revenue on certain cost plus and time and materials contracts equal to the amount we have the right to invoice the customer when performance obligations are satisfied over time and the invoice amount corresponds directly with the value we are providing the customer. Certain of our contracts recognize revenue at a point in time, and revenue on these contracts is recognized when control transfers to the customer. The majority of our revenue that is recognized at a point in time is related to parts and certain medical radioisotopes and radiopharmaceuticals in our Commercial Operations segment. For all contracts, if a current estimate of total contract cost indicates a loss on a contract, the projected loss is recognized in full when determined. See Note 3 for a further discussion of revenue recognition. Stock-Based Compensation We expense stock-based compensation in accordance with FASB Topic Compensation – Stock Compensation. Under this topic, the fair value of equity-classified awards, such as restricted stock, performance shares and stock options, is determined on the date of grant and is not remeasured. The fair value of liability-classified awards, such as cash-settled stock appreciation rights, restricted stock units and performance units, is determined on the date of grant and is remeasured at the end of each reporting period through the date of settlement. Grant date fair values for restricted stock, restricted stock units, performance shares and performance units are determined using the closing price of our common stock on the date of grant. Under the provisions of this FASB topic, we recognize expense for all share-based awards granted on a straight-line basis over the requisite service periods of the awards, which is generally equivalent to the vesting term. 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 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. These excess tax benefits result from tax deductions in excess of the cumulative compensation expense recognized for options exercised and other equity-classified awards. See Note 9 for a further discussion of stock-based compensation. Grant Accounting 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. 53 Table of Contents Research and Development Our research and development activities are related to the development and improvement of new and existing products and equipment, as well as conceptual and engineering evaluation for translation into practical applications. Research and development costs are expensed as incurred, unless these costs relate to customer-sponsored activities where we are reimbursed in accordance with the terms of the underlying contracts. Amounts expensed as incurred for company-funded research and development projects are included in Research and development costs. 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. Research and development activities totaled $53.7 million, $53.0 million and $45.4 million in the years ended December 31, 2024, 2023 and 2022, respectively. This includes amounts paid for by our customers of $46.2 million, $45.4 million and $35.9 million in the years ended December 31, 2024, 2023 and 2022, respectively. Capitalization of Interest Cost We capitalize interest in accordance with FASB Topic Interest . We incurred total interest of $65.7 million, $73.6 million and $53.9 million in the years ended December 31, 2024, 2023 and 2022, respectively, of which we capitalized $26.3 million, $26.6 million and $17.5 million in the years ended December 31, 2024, 2023 and 2022, respectively. Income Taxes Income tax expense for federal, foreign, state and local income taxes is calculated on pre-tax income based on current tax law and includes the cumulative effect of any changes in tax rates from those used previously in determining deferred tax assets and liabilities. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We assess deferred taxes and the adequacy of the valuation allowance on a quarterly basis. In the ordinary course of business, there is inherent uncertainty in quantifying our income tax positions. We assess our income tax positions and record tax benefits for all years subject to examination based upon management's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we have recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. We record interest and penalties (net of any applicable tax benefit) related to income taxes as a component of Provision for Income Taxes on our consolidated statements of income. We would be subject to withholding taxes if we were to distribute earnings from certain foreign subsidiaries, and unrecognized deferred income tax liabilities, including withholding taxes, would be payable upon distribution of these earnings. We consider the earnings of our non-U.S. subsidiaries to be permanently reinvested. Certain jurisdictions now implement the Organization for Economic Cooperation and Development’s Pillar Two rules regarding a 15% global minimum tax effective January 1, 2024. While it is uncertain whether the U.S. will enact legislation to adopt Pillar Two it had no impact on our provision for income taxes for the year ended December 31, 2024 and we do not currently expect Pillar Two to significantly impact our provision for income taxes in the future. Earnings Per Share 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 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. Cash and Cash Equivalents and Restricted Cash and Cash Equivalents Our cash equivalents are highly liquid investments with maturities of three months or less when we purchase them. 54 Table of Contents We record cash and cash equivalents as restricted when we are unable to freely use such cash and cash equivalents for our general operating purposes. At December 31, 2024, we had restricted cash and cash equivalents totaling $6.5 million, $3.7 million of which was held for future decommissioning of facilities (which is included in Other Assets on our consolidated balance sheets) and $2.8 million of which was held to meet reinsurance reserve requirements of our captive insurer. The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents on our consolidated balance sheets to the totals presented on our consolidated statements of cash flows: December 31, 2024 2023 (In thousands) Cash and cash equivalents $ 74,109 $ 75,766 Restricted cash and cash equivalents 2,785 2,858 Restricted cash and cash equivalents included in Other Assets 3,677 2,991 Total cash and cash equivalents and restricted cash and cash equivalents as presented on our consolidated statements of cash flows $ 80,571 $ 81,615 Investments Our investment portfolio consists primarily of 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 (loss). Our equity securities are carried at fair value with the unrealized gains and losses reported in earnings. We classify investments available for current operations in the consolidated balance sheets as current assets, while we classify investments held for long-term purposes as noncurrent assets. We adjust the amortized cost of debt securities for amortization of premiums and accretion of discounts to maturity, and such adjustments are included in Interest income. We include realized gains and losses on our investments in Other – net. The cost of securities sold is based on the specific identification method. We include interest on investments in Interest income. Inventories We carry our inventory at the lower of cost or net realizable value using either the weighted-average or first-in, first-out methods. At December 31, 2024 and 2023, Other current assets included inventories totaling $40.3 million and $27.4 million, respectively, consisting entirely of raw materials and supplies. Property, Plant and Equipment We carry our property, plant and equipment at depreciated cost, less any impairment provisions. We depreciate our property, plant and equipment using the straight-line method over estimated economic useful lives of eight to 40 years for buildings and three to 14 years for machinery and equipment. Our depreciation expense was $72.9 million, $65.6 million and $61.3 million for the years ended December 31, 2024, 2023 and 2022, respectively. We expense the costs of maintenance, repairs and renewals that do not materially prolong the useful life of an asset as we incur them. Property, plant and equipment is stated at cost and is set forth below: December 31, 2024 2023 (In thousands) Land $ 10,608 $ 10,627 Buildings 417,189 381,081 Machinery and equipment 1,166,236 1,108,504 Property under construction 584,539 571,758 2,178,572 2,071,970 Less: Accumulated depreciation 900,411 843,450 Property, Plant and Equipment, Net $ 1,278,161 $ 1,228,520 55 Table of Contents Goodwill Goodwill represents the excess of the cost of our acquired businesses over the fair value of the net assets acquired. 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. If we conclude based on this assessment that it is more likely than not that the reporting unit is not impaired, we do not perform a quantitative impairment test. In all other circumstances, we compare the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying value, no impairment charge is recorded. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge is recorded to goodwill in the amount by which carrying value exceeds fair value. The following summarizes the changes in the carrying amount of Goodwill: Government Operations Commercial Operations Total (In thousands) Balance at December 31, 2022 $ 172,087 $ 121,078 $ 293,165 Purchase price adjustment 588 — 588 Translation 578 2,689 3,267 Balance at December 31, 2023 $ 173,253 $ 123,767 $ 297,020 Translation (199) (9,459) (9,658) Balance at December 31, 2024 $ 173,054 $ 114,308 $ 287,362 Investments in Unconsolidated Affiliates We use the equity method of accounting for affiliates in which we are able to exert significant influence. Currently, all of our material investments in affiliates that are not consolidated are recorded using the equity method. Affiliates in which we are unable to exert significant influence are carried at fair value. Intangible Assets Intangible assets are recognized at fair value when acquired. Intangible assets with definite lives are amortized to Costs and Expenses using the straight-line method over their estimated useful lives and tested for impairment when events or changes in circumstances indicate that their carrying amounts may not be recoverable. Intangible assets with indefinite lives are not amortized and are subject to annual impairment testing. We may elect to perform a qualitative assessment when testing indefinite-lived intangible assets for impairment to determine whether events or circumstances affecting significant inputs related to the most recent quantitative evaluation have occurred, indicating that it is more likely than not that the indefinite-lived intangible asset is impaired. Otherwise, we test indefinite-lived intangible assets for impairment by quantitatively determining the fair value of the indefinite-lived intangible asset and comparing the fair value of the intangible asset to its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, we recognize impairment for the amount of the difference. 56 Table of Contents Our Intangible Assets were as follows: December 31, 2024 2023 2022 (In thousands) Amortized intangible assets: Gross cost: Technical support agreement $ 61,309 $ 66,562 $ 65,069 Customer relationships 55,394 57,103 56,176 Unpatented technology 37,634 40,540 39,609 CNSC class 1B nuclear facility license 23,644 25,670 25,094 Acquired backlog 13,248 13,882 13,537 Patented technology 694 755 738 All other 765 831 812 Total $ 192,688 $ 205,343 $ 201,035 Accumulated amortization: Technical support agreement $ (17,104) $ (15,676) $ (12,495) Customer relationships (26,029) (23,649) (20,590) Unpatented technology (11,650) (10,345) (7,966) CNSC class 1B nuclear facility license (6,337) (6,023) (5,052) Acquired backlog (9,140) (7,116) (4,474) Patented technology (508) (483) (405) All other (425) (371) (271) Total $ (71,193) $ (63,663) $ (51,253) Net amortized intangible assets $ 121,495 $ 141,680 $ 149,782 Unamortized intangible assets: NRC category 1 license $ 43,830 $ 43,830 $ 43,830 The following summarizes the changes in the carrying amount of Intangible Assets: Year Ended December 31, 2024 2023 2022 (In thousands) Balance at beginning of period $ 185,510 $ 193,612 $ 185,551 Acquisitions (Note 2) — — 28,500 Amortization expense (11,363) (11,396) (10,901) Translation (8,822) 3,294 (9,538) Balance at end of period $ 165,325 $ 185,510 $ 193,612 Estimated amortization expense for the next five fiscal years is as follows (amounts in thousands): Year Ended December 31, Amount 2025 $ 10,931 2026 $ 9,818 2027 $ 8,207 2028 $ 7,451 2029 $ 7,366 Leases 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 ten years. We include lease options in our 57 Table of Contents 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. Our right-of-use assets are included in Other Assets on our consolidated balance sheets. Our current lease liabilities are included in Accrued liabilities – other, and our noncurrent lease liabilities are included in Other Liabilities on our consolidated balance sheets. We use discount rates based on our incremental borrowing rate as most of our leases do not provide an implicit rate that can be readily determined. During the year ended December 31, 2024, we recognized lease expense of $7.4 million, which included $1.5 million related to the amortization of favorable lease agreements, and paid cash of $5.9 million for our operating leases. During the years ended December 31, 2023 and 2022, we recognized lease expense of $7.9 million and $8.6 million, respectively. At December 31, 2024, our weighted-average remaining lease term was 14.29 years, and for the purpose of measuring the present value of our lease liabilities, the weighted-average discount rate was 5.37%. The maturities of our lease liabilities at December 31, 2024 were as follows (amounts in thousands): 2025 $ 3,930 2026 $ 3,243 2027 $ 2,357 2028 $ 2,305 2029 $ 2,013 Thereafter $ 16,242 Total lease payments $ 30,090 Less: Interest $ (9,003) Present value of lease liabilities (1) $ 21,087 (1) Includes current lease liabilities of $3.8 million. At December 31, 2024, our right-of-use assets totaled $43.5 million. The difference between our right-of-use assets and lease liabilities primarily resulted from favorable lease agreements related to acquisitions. Warranty Expense We accrue estimated warranty expense, included in Cost of operations on our consolidated statements of income, to satisfy contractual warranty requirements when we recognize the associated revenue on the related contracts. In addition, we record specific provisions or reductions where we expect the actual warranty costs to significantly differ from the accrued estimates. Such changes could have a material effect on our consolidated financial condition, results of operations and cash flows. Included in Accrued liabilities – other on our consolidated balance sheets were accrued warranty expenses totaling $6.8 million and $6.4 million at December 31, 2024 and 2023, respectively. Deferred Debt Issuance Costs We have included deferred debt issuance costs in the consolidated balance sheets as a direct deduction from the carrying amount of our debt liability. We amortize deferred debt issuance costs as interest expense over the life of the related debt. The following summarizes the changes in the carrying amount of these assets: Year Ended December 31, 2024 2023 2022 (In thousands) Balance at beginning of period $ 9,078 $ 11,126 $ 10,696 Additions — — 2,405 Interest expense (2,048) (2,048) (1,975) Balance at end of period $ 7,030 $ 9,078 $ 11,126 Pension Plans and Postretirement Benefits We sponsor various defined benefit pension and postretirement benefit plans covering certain employees of our U.S. and Canadian subsidiaries. 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 58 Table of Contents 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. The expected rate of return on plan assets assumption is based on capital market assumptions of the long-term expected returns for the investment mix of assets currently in the portfolio. The expected rate of return on plan assets is determined to be the weighted-average of the nominal returns based on the weightings of the classes within the total asset portfolio. Expected health care cost trends represent expected annual rates of change in the cost of health care benefits and are estimated based on analysis of health care cost inflation. The components of benefit cost related to service cost, interest cost, expected return on plan assets and prior service cost amortization are recorded on a quarterly basis based on actuarial assumptions. In the fourth quarter of each year, or as interim remeasurements are required, we immediately recognize net actuarial gains and losses in earnings as a component of net periodic benefit cost. Recognized net actuarial gains and losses consist primarily of our reported actuarial gains and losses and the difference between the actual return on plan assets and the expected return on plan assets. We recognize the funded status of each plan as either an asset or a liability in the consolidated balance sheets. The funded status is the difference between the fair value of plan assets and the present value of its benefit obligation, determined on a plan-by-plan basis. Our pension plan assets can include assets that are difficult to value. See Note 7 for detailed information regarding our plan assets. Asset Retirement Obligations and Environmental Cleanup Costs We accrue for future decommissioning of our nuclear facilities that will permit the release of these facilities to unrestricted use at the end of each facility's service life, which is a requirement of our licenses from the U.S. Nuclear Regulatory Commission ("NRC") and the Canadian Nuclear Safety Commission ("CNSC"). In accordance with the FASB Topic Asset Retirement and Environmental Obligations, we record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When we initially record such a liability, we capitalize a cost by increasing the carrying amount of the related long-lived asset. When we acquire a business that has an asset retirement obligation, the asset retirement obligation is recognized at fair value without a corresponding increase to the related long-lived asset. Over time, the liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of a liability, we will settle the obligation for its recorded amount or incur a gain or loss. This topic applies to environmental liabilities associated with assets that we currently operate and are obligated to remove from service. For environmental liabilities associated with assets that we no longer operate, we have accrued amounts based on the estimated costs of cleanup activities for which we are responsible, net of any cost-sharing arrangements. We adjust the estimated costs as further information develops or circumstances change. Given the long-lived nature of these facilities, we are required to estimate retirement costs that will be incurred in the future, which may extend up to 40 years at the time the asset retirement obligation is established. Due to the significance of the remaining useful life of these facilities, the timing of retirement and future costs for material components of the asset retirement obligations, such as labor and waste disposal fees, could differ from our estimates. An exception to this accounting treatment relates to the work we perform for two facilities for which the U.S. Government is obligated to pay substantially all of the decommissioning costs. 59 Table of Contents 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 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: Year Ended December 31, 2024 2023 2022 (In thousands) Balance at beginning of period $ 79,541 $ 82,512 $ 84,132 Costs incurred (1,172) (3,471) (1,223) Additions/adjustments (3,201) (6,512) (4,289) Accretion 7,003 6,939 5,158 Translation (465) 73 (1,266) Balance at end of period (1) $ 81,706 $ 79,541 $ 82,512 (1) Includes current asset retirement obligations of $1.1 million, $2.3 million and $4.7 million at December 31, 2024, 2023 and 2022, respectively. Self-Insurance We have a wholly owned insurance subsidiary that provides employer's liability, general and automotive liability and primary workers' compensation insurance and, from time to time, builder's risk insurance (within certain limits) to our companies. We may also, in the future, have this insurance subsidiary accept other risks that we cannot or do not wish to transfer to outside insurance companies. Included in Other Liabilities on our consolidated balance sheets were reserves for self-insurance totaling $4.4 million and $4.1 million at December 31, 2024 and 2023, respectively. Loss Contingencies We accrue liabilities for loss contingencies when it is probable that a liability has been incurred and the amount of loss is reasonably estimable. We provide disclosure when there is a reasonable possibility that the ultimate loss will exceed the recorded provision or if such probable loss is not reasonably estimable. Due to the nature of our business, we are, from time to time, involved in investigations, litigation, disputes or claims related to our business activities, as discussed in Note 10. Our losses are typically resolved over long periods of time and are often difficult to assess and estimate due to, among other reasons, the possibility of multiple actions by third parties; the attribution of damages, if any, among multiple defendants; plaintiffs, in most cases involving personal injury claims, do not specify the amount of damages claimed; the discovery process may take multiple years to complete; during the litigation process, it is common to have multiple complex unresolved procedural and substantive issues; the potential availability of insurance and indemnity coverages; the wide-ranging outcomes reached in similar cases, including the variety of damages awarded; the likelihood of settlements for de minimis amounts prior to trial; the likelihood of success at trial; and the likelihood of success on appeal. 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 (Loss) The components of Accumulated other comprehensive income (loss) included in Stockholders' Equity are as follows: December 31, 2024 2023 (In thousands) Currency translation adjustments $ (33,735) $ 8,669 Net unrealized gain on derivative financial instruments 490 558 Unrecognized prior service cost on benefit obligations (15,233) (16,917) Net unrealized gain on available-for-sale investments 267 227 Accumulated other comprehensive income (loss) $ (48,211) $ (7,463) 60 Table of Contents 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, 2024 2023 2022 Accumulated Other Comprehensive Income (Loss) Component Recognized (In thousands) Line Item Presented Realized (loss) gain on derivative financial instruments $ (96) $ (72) $ (370) Revenues 1,075 427 (343) Cost of operations 979 355 (713) Total before tax (245) (91) 181 Provision for Income Taxes $ 734 $ 264 $ (532) Net Income Amortization of prior service cost on benefit obligations $ (3,325) $ (3,278) $ (3,283) Other – net 344 609 657 Provision for Income Taxes $ (2,981) $ (2,669) $ (2,626) Net Income Total reclassification for the period $ (2,247) $ (2,405) $ (3,158) Foreign Currency Translation We translate assets and liabilities of our foreign operations into U.S. 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 (loss). We report foreign currency transaction gains and losses in income. We have included in Other – net, transaction gains (losses) of $1.7 million, $1.8 million and $(1.4) million for the years ended December 31, 2024, 2023 and 2022, respectively. Derivative Financial Instruments Our operations give rise to exposure to market risks from changes in foreign currency exchange ("FX") rates. We use derivative financial instruments, primarily FX forward contracts, to reduce the impact of changes in FX rates on our operating results. We use these instruments to hedge our exposure associated with revenues or costs on our long-term contracts and other transactions that are denominated in currencies other than our operating entities' functional currencies. We do not hold or issue derivative financial instruments for trading or other speculative purposes. We enter into derivative financial instruments primarily as hedges of certain firm purchase and sale commitments and loans between subsidiaries denominated in foreign currencies. 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 (loss) 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. Gains and losses on derivative financial instruments that require immediate recognition are included as a component of Other – net on our consolidated statements of income and are recorded in the statements of cash flows based on the nature and use of the instruments. We have designated the majority of our FX forward contracts that qualify for hedge accounting as cash flow hedges. The hedged risk is the risk of changes in functional-currency-equivalent cash flows attributable to changes in FX spot rates of forecasted transactions primarily related to long-term contracts. We exclude from our assessment of effectiveness the portion of the fair value of the FX forward contracts attributable to the difference between FX spot rates and FX forward rates. At December 31, 2024, we had deferred approximately $0.5 million of net gains on these derivative financial instruments. Assuming market conditions continue, we expect to recognize the majority of this amount in the next 12 months. For the years ended December 31, 2024, 2023 and 2022, we recognized (gains) losses of $(38.0) million, $5.1 million and $(27.1) million, respectively, in Other – net on our consolidated statements of income associated with FX forward contracts not designated as hedging instruments. At December 31, 2024, our derivative financial instruments consisted of FX forward contracts with a total notional value of $441.8 million with maturities extending to July 2026. These instruments consisted primarily of FX forward contracts to purchase or sell Canadian dollars and Euros. We are exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments. We attempt to mitigate this risk by using major financial institutions with 61 Table of Contents high credit ratings. Our counterparties to derivative financial instruments have the benefit of the same collateral arrangements and covenants as described under our Credit Facility. New Accounting and Disclosure Standards In December 2023, the FASB issued updates to 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. 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 March 2024, the Securities and Exchange Commission ("SEC") issued a final rule under SEC Release Nos. 33-11275 and 34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors , that would require us to provide climate-related disclosures in annual reports and registration statements beginning with our annual report for the year ending December 31, 2025. The rule, as issued, would require disclosure of material climate-related risks, our governance and risk management of climate-related risks and any material climate-related targets or goals, greenhouse gas emissions as well as disclosure of the financial statement effects inclusive of capitalized costs, expenses incurred and losses resulting from severe weather events and natural conditions. In April 2024, the SEC issued an order staying the final rule pending the completion of litigation filed in federal courts challenging it. We are currently evaluating the impact of the final rule and related litigation on our disclosures. In November 2024, the FASB issued updates to Topic Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures: Disaggregation of Income Statement Expenses . These updates require a public entity to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis. The updates are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. A public entity may apply these amendments on a prospective basis or retrospectively to any or all prior periods presented in the financial statements. 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. NOTE 2 – ACQUISITIONS Aerojet Ordnance Tennessee, Inc. On November 4, 2024, we announced our intention to acquire Aerojet Ordnance Tennessee, Inc. ("A.O.T"), a subsidiary of L3Harris Technologies, Inc.. This acquisition was subsequently completed on January 3, 2025 for approximately $105.5 million, subject to certain working capital adjustments. A.O.T is a leading provider of advanced special materials which will further enhance our capabilities to develop and manufacture advanced materials and products for commercial, military and space applications. A.O.T. will be reported as part of our Government Operations segment. As of the date of this filing, we have not completed a preliminary purchase price allocation. Kinectrics Inc. On December 27, 2024, we entered into an agreement to acquire Kinectrics Holdings, Inc., the parent company of Kinectrics Inc. ("Kinectrics") for approximately CAD 782.7 million subject to certain working capital adjustments. This acquisition is targeted to close in the middle of 2025, following necessary regulatory and other approvals, for approximately $525.0 million U.S. dollar equivalent. Kinectrics is a leader in providing lifecycle management services for the global nuclear power and transmission and distribution markets and in the production and supply of isotopes for the radiopharmaceutical industry and employs over 1,300 employees located across 20 sites worldwide. Following the close, Kinectrics will be reported as part of our Commercial Operations segment. Due to the pending nature of this transaction, we have not initiated a preliminary purchase price allocation as of the date of this filing. NOTE 3 – REVENUE RECOGNITION Contracts and Revenue Recognition Government Operations 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 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 62 Table of Contents identify as a separate performance obligation. We recognize revenue using a cost-to-cost method to measure progress as control is continually transferred to the customer as we incur costs on the performance obligations. We determine the stand-alone selling price of our performance obligations based on the expected cost plus margin approach. We allocate revenue to the individual performance obligations within contracts with multiple performance obligations based on the stand-alone selling price of the individual performance obligations. Our fixed-price incentive fee contracts include incentives that we concluded to be variable consideration. 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. The remaining contracts typically have immaterial amounts of variable consideration and have a single performance obligation. Our estimates of variable consideration and total estimated costs at completion are determined through a detailed process based on historical performance and our expertise using the most likely method. Variations from estimated contract performance could result in a material effect on our financial condition and results of operations in future periods. Our Government Operations segment's contracts primarily allow for billings as costs are incurred, subject to certain retainages that require milestones to be reached for the remaining consideration to be paid. Our fuel and downblending contracts allow billing when we achieve certain milestones related to our progress. Commercial Operations Our Commercial Operations segment recognizes revenue over time using a cost-to-cost method for the manufacturing of large components, non-standard parts, fuel bundles and service contracts as control continually transfers to the customers. For standard parts, revenue is recognized at the point in time control transfers to the customer, which is consistent with the transfer of ownership. For medical radioisotopes, we recognize revenue either at the point in time control transfers to the customer or over time using a unit of output method. This segment generates revenue primarily from firm-fixed-price contracts that do not contain variable consideration as well as time-and-materials based contracts. Certain of these contracts contain assurance warranties and/or provisions for liquidated damages, which are expected to have an immaterial impact to the contracts based on our historical experience. We are entitled to payment on the majority of our Commercial Operations segment contracts when we achieve certain milestones related to our progress. Disaggregated Revenues We allocate geographic revenues based on the location of the customers' operations. Revenues by geographic area and customer type were as follows: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Government Operations Commercial Operations Total Government Operations Commercial Operations Total Government Operations Commercial Operations Total (In thousands) United States: Government $ 2,068,239 $ — $ 2,068,239 $ 1,884,671 $ — $ 1,884,671 $ 1,703,005 $ — $ 1,703,005 Non-Government 86,012 75,954 161,966 123,604 57,654 181,258 91,653 31,120 122,773 $ 2,154,251 $ 75,954 $ 2,230,205 $ 2,008,275 $ 57,654 $ 2,065,929 $ 1,794,658 $ 31,120 $ 1,825,778 Canada: Government $ 127 $ — $ 127 $ 245 $ — $ 245 $ 79 $ — $ 79 Non-Government 747 430,385 431,132 778 389,234 390,012 3,134 373,705 376,839 $ 874 $ 430,385 $ 431,259 $ 1,023 $ 389,234 $ 390,257 $ 3,213 $ 373,705 $ 376,918 Other: Government $ 12,165 $ — $ 12,165 $ 10,016 $ — $ 10,016 $ 1,356 $ — $ 1,356 Non-Government 15,750 17,633 33,383 12,023 19,456 31,479 9,256 22,533 31,789 $ 27,915 $ 17,633 $ 45,548 $ 22,039 $ 19,456 $ 41,495 $ 10,612 $ 22,533 $ 33,145 Segment Revenues $ 2,183,040 $ 523,972 2,707,012 $ 2,031,337 $ 466,344 2,497,681 $ 1,808,483 $ 427,358 2,235,841 Eliminations (3,358) (1,372) (3,007) Revenues $ 2,703,654 $ 2,496,309 $ 2,232,834 63 Table of Contents Revenues by timing of transfer of goods or services were as follows: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Government Operations Commercial Operations Total Government Operations Commercial Operations Total Government Operations Commercial Operations Total (In thousands) Over time $ 2,175,010 $ 439,504 $ 2,614,514 $ 2,012,949 $ 392,060 $ 2,405,009 $ 1,798,388 $ 370,198 $ 2,168,586 Point-in-time 8,030 84,468 92,498 18,388 74,284 92,672 10,095 57,160 67,255 Segment Revenues $ 2,183,040 $ 523,972 2,707,012 $ 2,031,337 $ 466,344 2,497,681 $ 1,808,483 $ 427,358 2,235,841 Eliminations (3,358) (1,372) (3,007) Revenues $ 2,703,654 $ 2,496,309 $ 2,232,834 Revenues by contract type were as follows: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 Government Operations Commercial Operations Total Government Operations Commercial Operations Total Government Operations Commercial Operations Total (In thousands) Fixed-Price Incentive Fee $ 1,173,728 $ 17,379 $ 1,191,107 $ 1,218,516 $ 11,119 $ 1,229,635 $ 1,226,265 $ 9,728 $ 1,235,993 Firm-Fixed-Price 590,884 315,061 905,945 469,138 312,236 781,374 334,076 300,129 634,205 Cost-Plus Fee 388,116 — 388,116 337,598 — 337,598 244,063 — 244,063 Time-and-Materials 30,312 191,532 221,844 6,085 142,989 149,074 4,079 117,501 121,580 Segment Revenues $ 2,183,040 $ 523,972 2,707,012 $ 2,031,337 $ 466,344 2,497,681 $ 1,808,483 $ 427,358 2,235,841 Eliminations (3,358) (1,372) (3,007) Revenues $ 2,703,654 $ 2,496,309 $ 2,232,834 Performance Obligations As we progress on our contracts and the underlying performance obligations for which we recognize revenue over time, we refine our estimates of variable consideration and total estimated costs at completion, which impact the overall profitability on our contracts and performance obligations. Changes in these estimates result in the recognition of cumulative catch-up adjustments that impact our revenues and/or costs of contracts. The aggregate impact of changes in estimates increased our revenue and operating income as follows: Year Ended December 31, 2024 2023 2022 (In thousands) Revenues $ 37,908 $ 24,728 $ 26,629 Operating Income (1) $ 36,770 $ 24,813 $ 24,405 (1) During the year ended December 31, 2024, no adjustments to any one contract had a material impact on our consolidated financial statements. 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. 64 Table of Contents 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. In accordance with contract terms, certain amounts that are withheld by our customers and are classified within Retainages. Certain of these amounts require conditions other than the passage of time to be achieved, with the remaining amounts only requiring the passage of time. Most long-term contracts contain provisions for progress payments. Our unbilled receivables do not contain an allowance for credit losses as we expect to invoice customers and collect all amounts for unbilled receivables. 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, 2024, our unbilled receivables increased $39.5 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, 2024, our Advance billings on contracts increased $53.9 million primarily as a result of revenue recognized in excess of billings on certain firm-fixed-price contracts within our Government Operations segment. Certain contracts within 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. Retainages also vary as a result of timing differences between incurring costs and achieving milestones that allow us to recover these amounts. December 31, December 31, 2024 2023 (In thousands) Included in Contracts in progress: Unbilled receivables $ 559,415 $ 519,931 Retainages $ 33,667 $ 55,181 Advance billings on contracts $ 161,290 $ 107,391 During the years ended December 31, 2024 and 2023, we recognized $87.0 million and $70.8 million of revenue that was in Advance billings on contracts at the beginning of each year, respectively. Remaining Performance Obligations Remaining performance obligations represent the dollar amount of revenue we expect to recognize in the future from performance obligations on contracts previously awarded and in progress. Our backlog is equal to our remaining performance obligations under contracts that meet the criteria in FASB Topic Revenue from Contracts with Customers . At December 31, 2024, our ending backlog was $4,842.5 million, which included $387.4 million of unfunded backlog related to U.S. Government contracts. We expect to recognize approximately 48% of the revenue associated with our backlog by the end of 2025, with the remainder to be recognized thereafter. NOTE 4 – EQUITY METHOD INVESTMENTS We have investments in entities that we account for using the equity method. Our share of the undistributed earnings of our equity method investees were $40.4 million and $31.1 million at December 31, 2024 and 2023, respectively. These amounts are included in Investments in Unconsolidated Affiliates on our consolidated balance sheets. 65 Table of Contents The following tables summarize combined balance sheet and income statement information for investments accounted for under the equity method: December 31, 2024 2023 (In thousands) Current assets $ 567,185 $ 555,364 Noncurrent assets 1,302 1,933 Total Assets $ 568,487 $ 557,297 Total Liabilities $ 285,225 $ 307,562 Owners' equity 283,262 249,735 Total Liabilities and Owners' Equity $ 568,487 $ 557,297 Year Ended December 31, 2024 2023 2022 (In thousands) Revenues $ 5,864,628 $ 5,334,822 $ 4,580,032 Gross profit $ 198,616 $ 185,345 $ 176,592 Net income $ 195,256 $ 181,981 $ 173,339 Reimbursable costs recorded in revenues by the unconsolidated joint ventures in our Government Operations segment totaled $5,495.9 million, $5,126.6 million and $4,453.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. Income taxes for the investees are the responsibility of the respective owners. Accordingly, no provision for income taxes has been recorded by the investees. Reconciliations of net income per combined income statement information of our investees to equity in income of investees per our consolidated statements of income are as follows: Year Ended December 31, 2024 2023 2022 (In thousands) Equity income based on stated ownership percentages $ 55,967 $ 50,595 $ 46,784 GAAP and other adjustments (36) 212 (811) Equity in income of investees $ 55,931 $ 50,807 $ 45,973 Our transactions with unconsolidated affiliates were as follows: Year Ended December 31, 2024 2023 2022 (In thousands) Sales to $ 23,068 $ 18,530 $ 19,857 Dividends received $ 45,333 $ 61,937 $ 42,512 Capital contributions, net of returns $ 197 $ — $ 11,450 At December 31, 2024 and 2023, Accounts receivable – other included amounts due from unconsolidated affiliates of $0.0 million and $1.1 million, respectively. NOTE 5 – INCOME TAXES We are subject to federal income tax in the U.S., Canada and the U.K., as well as income tax within multiple U.S. state jurisdictions. We provide for income taxes based on the enacted tax laws and rates in the jurisdictions in which we conduct our operations. These jurisdictions may have regimes of taxation that vary with respect to nominal rates and with respect to the basis on which these rates are applied. This variation, along with the changes in our mix of income within these jurisdictions, 66 Table of Contents can contribute to shifts in our effective tax rate from period to period. As of the date of this filing, we are not currently under audit by any domestic or international tax authority. 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 (amounts in thousands): Year Ended December 31, 2024 Amount Balance at beginning of period (1) $ — Additions based on tax positions taken in the current year 2,121 Additions based on tax positions taken in prior years 19,027 Changes for tax positions taken in prior years — Settlements with tax authorities — Balance at end of period $ 21,148 (1) We did not have any uncertain tax positions or activity during the years ended December 31, 2023 and 2022. The unrecognized tax benefits balance of $21.1 million at December 31, 2024 would reduce our effective tax rate if recognized. We believe it is unlikely that our unrecognized tax benefits will materially increase or decrease within the next 12 months. Deferred income taxes reflect the net tax effects of temporary differences between the financial and tax bases of assets and liabilities. Significant components of deferred tax assets and liabilities as of December 31, 2024 and 2023 were as follows: December 31, 2024 2023 (In thousands) Deferred tax assets: Pension liability $ 17,359 $ 17,439 Accrued warranty expense 1,570 1,641 Capitalized Section 174 expenditures 64,775 23,800 Accrued vacation pay 2,434 3,103 Accrued liabilities for executive and employee incentive compensation 18,736 13,784 Environmental and products liabilities 20,945 20,576 Lease liabilities 5,055 4,860 Investments in joint ventures and affiliated companies 2,746 224 Long-term contracts — 13,363 U.S. federal tax credits and loss carryforward 3,071 7,055 U.S. state tax credits and loss carryforward 10,119 7,935 Foreign tax credit and loss carryforward 23,394 22,869 Other 1,692 2,018 Gross deferred tax assets 171,896 138,667 Valuation allowance for deferred tax assets (17,039) (17,421) Total deferred tax assets 154,857 121,246 Deferred tax liabilities: Property, plant and equipment 88,090 85,661 Long-term contracts 54,714 — Right-of-use lease assets 10,590 11,550 Accrued liabilities for self-insurance (including postretirement health care benefits) 826 341 Intangibles 19,589 21,976 Total deferred tax liabilities 173,809 119,528 Net deferred tax assets (liabilities) $ (18,952) $ 1,718 67 Table of Contents The components of Income before Provision for Income Taxes were as follows: Year Ended December 31, 2024 2023 2022 (In thousands) U.S. $ 301,018 $ 282,459 $ 281,677 Other than U.S. 47,702 38,941 32,700 Income before Provision for Income Taxes $ 348,720 $ 321,400 $ 314,377 The components of Provision for Income Taxes were as follows: Year Ended December 31, 2024 2023 2022 (In thousands) Current: U.S. – federal $ 36,553 $ 69,254 $ 54,683 U.S. – state and local 2,005 4,255 5,360 Other than U.S. 8,019 6,698 10,199 Total current 46,577 80,207 70,242 Deferred: U.S. – federal 15,439 (8,968) 5,755 U.S. – state and local 2,648 (376) (34) Other than U.S. 1,758 4,216 (206) Total deferred 19,845 (5,128) 5,515 Provision for Income Taxes $ 66,422 $ 75,079 $ 75,757 The following is a reconciliation of our income tax provision from the U.S. statutory federal tax rate to our consolidated effective tax rate: Year Ended December 31, 2024 2023 2022 U.S. federal statutory tax rate 21.0 % 21.0 % 21.0 % State and local income taxes 1.3 % 1.2 % 1.7 % Research and development tax credit (4.0) % — % — % Excess tax deductions on equity compensation (0.5) % (0.3) % (0.1) % Other, net 1.2 % 1.5 % 1.5 % Effective tax rate 19.0 % 23.4 % 24.1 % The effective tax rate benefit related to research and development tax credits is presented net of reserves for uncertain tax positions and includes credits corresponding to current year activities, as well as credits corresponding to activities in prior reporting periods. At December 31, 2024, we had a valuation allowance of $17.0 million for deferred tax assets, which we expect cannot be realized through carrybacks, future reversals of existing taxable temporary differences and our estimate of future taxable income. We believe that our remaining deferred tax assets are more likely than not realizable through carrybacks, future reversals of existing taxable temporary differences, our estimate of future taxable income and potential tax planning. Any changes to our estimated valuation allowance could be material to our consolidated financial statements. 68 Table of Contents The following is an analysis of our valuation allowance for deferred tax assets: Beginning Balance Charges To Costs and Expenses Charged To Other Accounts Ending Balance (In thousands) Year Ended December 31, 2024 $ (17,421) 382 — $ (17,039) Year Ended December 31, 2023 $ (13,022) (4,399) — $ (17,421) Year Ended December 31, 2022 $ (13,218) 196 — $ (13,022) We have domestic federal and foreign capital losses of $7.0 million available to offset future capital gains. The domestic federal capital losses begin to expire in 2025, while the foreign capital losses have an indefinite carryforward period. We are carrying a full valuation allowance of $7.0 million against the deferred tax asset related to these domestic federal and foreign capital loss carryforwards. In addition, we have state credits and state net operating losses of $12.8 million ($10.1 million net of federal tax benefit) available to offset future taxable income in various states. These state net operating loss carryforwards begin to expire in 2025. We are carrying a valuation allowance of $12.8 million ($10.1 million net of federal tax benefit) against the deferred tax asset related to the state credits and state loss carryforwards. We would be subject to withholding taxes if we were to distribute earnings from certain foreign subsidiaries. As of December 31, 2024, the undistributed earnings of these subsidiaries were approximately $323.1 million, and unrecognized deferred income tax liabilities of approximately $16.2 million would be payable upon the distribution of these earnings. All of our foreign earnings are considered indefinitely reinvested. NOTE 6 – LONG-TERM DEBT Our Long-Term Debt consists of the following: December 31, 2024 2023 (In thousands) Debt Instruments: Senior Notes $ 800,000 $ 800,000 Credit Facility 262,500 418,750 Less: Amounts due within one year 12,500 6,250 Long-Term Debt, gross 1,050,000 1,212,500 Less: Deferred debt issuance costs 7,030 9,078 Long-Term Debt $ 1,042,970 $ 1,203,422 Maturities of Long-Term Debt subsequent to December 31, 2024 are as follows: 2025 – $12.5 million; 2026 – $12.5 million; 2027 – $237.5 million; 2028 – $400.0 million and 2029 – $400.0 million. Credit Facility 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 69 Table of Contents 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 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 Secured Overnight Financing Rate ("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. 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, 2024, we were in compliance with all covenants set forth in the Credit Facility. 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 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. Based on the total net leverage ratio applicable at December 31, 2024, the margin for Term SOFR and base rate loans was 1.25% and 0.25%, respectively, the letter of credit fee for financial letters of credit and performance letters of credit was 1.25% and 0.825%, respectively, and the commitment fee for the unused portion of the Revolving Credit Facility was 0.175%. As of December 31, 2024, borrowings under our Term Loan totaled $237.5 million, borrowings and letters of credit issued under the Revolving Credit Facility totaled $25.0 million and $1.4 million, respectively, and we had $723.6 million available under the Revolving Credit Facility for borrowings and to meet letter of credit requirements. As of December 31, 2024, the weighted-average interest rate on outstanding borrowings under our Credit Facility was 5.72%. 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 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; and (3) if any event of default exists, the lenders will be permitted to terminate their commitments thereunder and exercise other rights and remedies, including the commencement of foreclosure or other actions against the collateral. If any default occurs under the Credit Facility, or if we are unable to make any of the representations and warranties in the Credit Facility, we will be unable to borrow funds or have letters of credit issued under the Credit Facility. Senior Notes due 2028 We issued $400 million aggregate principal amount of 4.125% senior notes due 2028 (the "Senior Notes due 2028") pursuant to an indenture dated June 12, 2020 (the "2020 Indenture"), among the Company, certain of our subsidiaries, as guarantors, and U.S. Bank Trust Company, National Association (formerly known as U.S. Bank National Association) ("U.S. Bank"), as trustee. The Senior Notes due 2028 are guaranteed by each of the Company's present and future direct and indirect wholly owned domestic subsidiaries that is a guarantor under the Credit Facility. 70 Table of Contents Interest on the Senior Notes due 2028 is payable semi-annually in cash in arrears on June 30 and December 30 of each year at a rate of 4.125% per annum. 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, 2024 at a redemption price equal to (i) 101.031% of the principal amount to be redeemed if the redemption occurs during the 12-month period beginning on June 30, 2024 and (ii) 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. 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. The 2020 Indenture also contains customary negative covenants. As of December 31, 2024, we were in compliance with all covenants set forth in the 2020 Indenture and the Senior Notes due 2028. Senior Notes due 2029 We issued $400 million aggregate principal amount of 4.125% senior notes due 2029 (the "Senior Notes due 2029") pursuant to an indenture dated April 13, 2021 (the "2021 Indenture"), among the Company, certain of our subsidiaries, as guarantors, and U.S. Bank, as trustee. The Senior Notes due 2029 are guaranteed by each of the Company's present and future direct and indirect wholly owned domestic subsidiaries that is a guarantor under the Credit Facility. Interest on the Senior Notes due 2029 is payable semi-annually in cash in arrears on April 15 and October 15 of each year at a rate of 4.125% per annum. 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 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. The 2021 Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the 2021 Indenture or the Senior Notes due 2029 and certain provisions related to bankruptcy events. The 2021 Indenture also contains customary negative covenants. As of December 31, 2024, we were in compliance with all covenants set forth in the 2021 Indenture and the Senior Notes due 2029. Other Arrangements We have posted surety bonds to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize surety bond facilities to support such obligations, but the issuance of surety bonds under those facilities is typically at the surety's discretion, and the surety bond 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 bond capacity, we believe our current capacity is adequate to support our existing requirements for the next 12 months. In addition, these surety bonds generally indemnify the beneficiaries should we fail to perform our obligations under the applicable agreements. We, and certain of our subsidiaries, have jointly executed general agreements of indemnity in favor of surety underwriters relating to surety bonds those underwriters issue. As of December 31, 2024, surety bonds issued and outstanding under these arrangements totaled approximately $278.7 million. Similarly, we have provided letters of credit and bank guarantees 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 and bank guarantees 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. As of December 31, 2024, letters of credit and bank guarantees issued and outstanding under our bilateral letter of credit facility totaled approximately $33.7 million, and such letters of credit and bank guarantees are secured by the collateral under our Credit Facility. 71 Table of Contents NOTE 7 – PENSION PLANS AND POSTRETIREMENT BENEFITS We have historically provided defined benefit retirement benefits, primarily through noncontributory pension plans, for most of our regular employees. Certain of our subsidiaries have made other benefits available to certain groups of employees, including postretirement health care and life insurance benefits. For salaried employees, all major U.S. and Canadian defined benefit retirement plans have been closed to new entrants, and benefit accruals have ceased. For hourly employees, certain defined benefit retirement plans have been closed to new entrants. Our funding policy is to fund the plans as recommended by the respective plan actuaries and in accordance with the Employee Retirement Income Security Act of 1974, as amended, or other applicable law. Assuming we continue as a government contractor, our contractual arrangements with the U.S. Government provide for the recovery of contributions to our pension and other postretirement benefit plans covering employees working primarily in our Government Operations segment. 72 Table of Contents Obligations and Funded Status Pension Benefits Year Ended December 31, Other Benefits Year Ended December 31, 2024 2023 2024 2023 (In thousands) Change in benefit obligation: Benefit obligation at beginning of period $ 954,369 $ 926,978 $ 43,316 $ 43,050 Service cost 7,523 7,515 384 338 Interest cost 45,513 47,638 2,012 2,139 Plan participants' contributions 156 137 396 218 Amendments 1,307 2,161 — — Settlements — — — — Actuarial loss (gain) (50,535) 30,568 835 159 Foreign currency exchange rate changes (2,814) 738 (1,054) 292 Benefits paid (62,605) (61,366) (2,813) (2,880) Benefit obligation at end of period $ 892,914 $ 954,369 $ 43,076 $ 43,316 Change in plan assets: Fair value of plan assets at beginning of period $ 878,942 $ 875,691 $ 47,453 $ 45,616 Actual return on plan assets 271 59,354 1,661 3,769 Plan participants' contributions 156 137 121 218 Company contributions 4,611 4,390 1,048 870 Settlements — — — — Foreign currency exchange rate changes (3,222) 736 — — Benefits paid (62,605) (61,366) (2,777) (3,020) Fair value of plan assets at the end of period 818,153 878,942 47,506 47,453 Funded status $ (74,761) $ (75,427) $ 4,430 $ 4,137 Amounts recognized in the balance sheet consist of: Prepaid postretirement benefit obligation $ — $ — $ 22,880 $ 23,915 Prepaid pension 10,663 10,146 — — Accrued employee benefits (2,822) (2,787) (1,935) (1,312) Accumulated postretirement benefit obligation — — (16,515) (18,466) Pension liability (82,602) (82,786) — — Accrued benefit liability, net $ (74,761) $ (75,427) $ 4,430 $ 4,137 Amount recognized in accumulated comprehensive income (before taxes): Prior service cost (credit) $ 17,301 $ 19,287 $ 2,666 $ 2,711 Supplemental information: Plans with accumulated benefit obligation in excess of plan assets: Projected benefit obligation $ 872,933 $ 933,588 N/A N/A Accumulated benefit obligation $ 871,892 $ 906,593 $ 16,658 $ 17,747 Fair value of plan assets $ 787,514 $ 847,755 $ 107 $ — Plans with plan assets in excess of accumulated benefit obligation: Projected benefit obligation $ 19,974 $ 20,781 N/A N/A Accumulated benefit obligation $ 19,974 $ 20,781 $ 26,418 $ 25,569 Fair value of plan assets $ 30,638 $ 31,187 $ 47,399 $ 47,453 73 Table of Contents We record the service cost component of net periodic benefit cost within Operating income on our consolidated statements of income. For the years ended December 31, 2024, 2023 and 2022, these amounts were $7.9 million, $7.9 million and $11.8 million, respectively. All other components of net periodic benefit cost are included in Other – net on our consolidated statements of income. For the years ended December 31, 2024, 2023 and 2022, these amounts were $(0.8) million, $20.9 million and $(4.0) million, respectively. Components of net periodic benefit cost included in net income are as follows: Pension Benefits Year Ended December 31, Other Benefits Year Ended December 31, 2024 2023 2022 2024 2023 2022 (In thousands) Components of net periodic benefit cost: Service cost $ 7,523 $ 7,515 $ 11,116 $ 384 $ 338 $ 650 Interest cost 45,513 47,638 30,924 2,012 2,139 1,387 Expected return on plan assets (60,291) (60,437) (83,254) (1,948) (2,536) (2,974) Amortization of prior service cost 3,280 3,238 3,257 45 40 26 Recognized net actuarial loss (gain) 9,485 31,755 52,202 1,122 (946) (5,616) Net periodic benefit cost (income) $ 5,510 $ 29,709 $ 14,245 $ 1,615 $ (965) $ (6,527) Net periodic benefit cost related to our pension plans is calculated in accordance with GAAP. In addition, we calculate pension costs in accordance with U.S. cost accounting standards ("CAS") for purposes of cost recovery on our U.S. Government contracts to the extent applicable. See further discussion of CAS pension costs under the heading "Critical Accounting Estimates" in Item 7 of this Annual Report on Form 10-K. Recognized net actuarial losses (gains) consist primarily of our reported actuarial losses (gains), settlements, and the differences between the actual returns on plan assets and the expected returns on plan assets. The benefit obligation of our pension plans as of December 31, 2024 and 2023 increased (decreased) by $(49.0) million and $33.2 million, respectively, due to changes in the discount rate. In November 2022, we completed the wind-up of our foreign salaried pension benefit plan and settled approximately $48.8 million in benefit obligations. As a result, we recognized pension settlement-related charges of $12.6 million during the year ended December 31, 2022. Additional Information Pension Benefits Year Ended December 31, Other Benefits Year Ended December 31, 2024 2023 2024 2023 (In thousands) Decrease in accumulated other comprehensive income due to actuarial losses – before taxes $ (1,307) $ (2,161) $ — $ — In the current fiscal year, we have recognized expense 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. 74 Table of Contents Assumptions Pension Benefits Other Benefits 2024 2023 2024 2023 Weighted-average assumptions used to determine net periodic benefit obligations at December 31: Discount rate 5.62 % 5.07 % 5.33 % 4.92 % Pension Benefits Other Benefits 2024 2023 2022 2024 2023 2022 Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31: Discount rate to determine interest cost 4.88 % 5.26 % 2.42 % 4.84 % 5.23 % 2.42 % Expected return on plan assets 7.13 % 7.13 % 7.10 % 4.20 % 5.67 % 5.67 % The expected return on plan assets rate assumptions are based on the long-term expected returns for the investment mix of assets in the portfolio. In setting these rates, we use a building-block approach. Historical real return trends for the various asset classes in the plan's portfolio are combined with anticipated future market conditions to estimate the real rate of return for each asset class. These rates are then adjusted for anticipated future inflation to estimate nominal rates of return for each asset class. The expected rate of return on plan assets is then determined to be the weighted-average nominal return based on the weightings of the asset classes within the total asset portfolio. Our existing other benefit plans are unfunded, with the exception of the NFS postretirement benefit plans. These plans provide health benefits to certain salaried and hourly employees, as well as retired employees, of NFS. All of the assets for these postretirement benefit plans are contributed into a Voluntary Employees' Beneficiary Association trust. 2024 2023 Assumed health care cost trend rates at December 31: Health care cost trend rate assumed for next year 7.50 % 7.50 % Rates to which the cost trend rate is assumed to decline (ultimate trend rate) 4.50 % 4.50 % Year that the rate reaches ultimate trend rate 2037 2037 Investment Goals General The overall investment strategy of the pension trusts is to achieve long-term growth of principal, while avoiding excessive risk and to minimize the probability of loss of principal over the long term. The specific investment goals that have been set for the pension trusts, in the aggregate, are (1) to ensure that plan liabilities are met when due and (2) to achieve an investment return on trust assets consistent with a reasonable level of risk. Allocations to each asset class for both domestic and foreign plans are reviewed periodically and rebalanced, if appropriate, to assure the continued relevance of the goals, objectives and strategies. The pension trusts for both our domestic and foreign plans employ a professional investment advisor and a number of professional investment managers whose individual benchmarks are, in the aggregate, consistent with the plan's overall investment objectives. The goals of each investment manager are (1) to meet (in the case of passive accounts) or exceed (for actively managed accounts) the benchmark selected and agreed upon by the manager and the pension trust and (2) to display an overall level of risk in its portfolio that is consistent with the risk associated with the agreed upon benchmark. The investment performance of total portfolios, as well as asset class components, is periodically measured against commonly accepted benchmarks, including the individual investment manager benchmarks. In evaluating investment manager performance, consideration is also given to personnel, strategy, research capabilities, organizational and business matters, adherence to discipline and other qualitative factors that may impact the ability to achieve desired investment results. 75 Table of Contents Domestic Plans We sponsor the following domestic defined benefit pension plans: • BWXT Retirement Plan; • Nuclear Fuel Services, Inc. Retirement Plan for Salaried Employees; and • Nuclear Fuel Services, Inc. Retirement Plan for Hourly Employees. The assets of the domestic pension plans are commingled for investment purposes and held by the trustee in the BWXT Master Trust (the "Master Trust"). For the years ended December 31, 2024 and 2023, the investment returns on domestic plan assets of the Master Trust (net of deductions for management fees) were approximately 0% and 7%, respectively. The following is a summary of the asset allocations for the Master Trust at December 31, 2024 and 2023 by asset category: December 31, 2024 2023 Asset Category: U.S. Government Securities 33 % 34 % Commingled and Mutual Funds 27 % 25 % Real Estate 14 % 15 % Diversified Credit 14 % 13 % Fixed Income (excluding U.S. Government Securities) 6 % 6 % Partnerships with Security Holdings 2 % 2 % Other 4 % 5 % Total 100 % 100 % The target allocation for 2025 for the domestic plans, by asset class, is as follows: Asset Class: Fixed Income 57 % Equities 33 % Other 10 % Foreign Plan We sponsor the BWXT Canada Ltd. Bargaining Unit Employees' Pension Plan. The following is a summary of the asset allocations of this plan at December 31, 2024 and 2023 by asset category: December 31, 2024 2023 Asset Category: Fixed Income 60 % 61 % Commingled and Mutual Funds 37 % 35 % Cash and Other 3 % 4 % Total 100 % 100 % The target allocation for 2025 for the Canadian plan, by asset class, is as follows: Asset Class: Fixed Income 65 % Equities 35 % 76 Table of Contents Fair Value See Note 14 for a detailed description of fair value measurements and the hierarchy established for valuation inputs. The following is a summary of total assets for our plans measured at fair value at December 31, 2024: 12/31/2024 Level 1 Level 2 Level 3 Unclassified (In thousands) Pension and Other Benefits: U.S. Government Securities 261,008 261,008 — — — Commingled and Mutual Funds 231,292 42,909 — — 188,383 Real Estate 110,223 — — — 110,223 Diversified Credit 111,003 — — — 111,003 Fixed Income 107,287 36,277 — — 71,010 Partnerships with Security Holdings 14,348 — — — 14,348 Cash, Cash Equivalents and Accrued Items (1) 30,391 — — — 30,391 Total Assets $ 865,552 $ 340,194 $ — $ — $ 525,358 (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 total assets for our plans measured at fair value at December 31, 2023: 12/31/2023 Level 1 Level 2 Level 3 Unclassified (In thousands) Pension and Other Benefits: U.S. Government Securities $ 288,495 $ 288,495 $ — $ — $ — Commingled and Mutual Funds 231,801 46,504 — — 185,297 Fixed Income 108,646 36,741 — — 71,905 Diversified Credit 113,271 — — — 113,271 Real Estate 123,250 — — — 123,250 Partnerships with Security Holdings 19,752 — — — 19,752 Cash, Cash Equivalents and Accrued Items (1) 41,180 — — — 41,180 Total Assets $ 926,395 $ 371,740 $ — $ — $ 554,655 (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. Cash Flows Domestic Plans Foreign Plans Pension Benefits Other Benefits Pension Benefits Other Benefits (In thousands) Expected employer contributions to trusts of defined benefit plans: 2025 $ 4,170 $ — $ 873 N/A Expected benefit payments: 2025 $ 65,749 $ 2,718 $ 987 $ 590 2026 $ 66,072 $ 2,667 $ 1,115 $ 644 2027 $ 66,834 $ 2,642 $ 1,260 $ 678 2028 $ 67,269 $ 2,584 $ 1,350 $ 711 2029 $ 67,347 $ 2,575 $ 1,417 $ 724 2030-2034 $ 330,049 $ 11,978 $ 8,343 $ 3,526 77 Table of Contents Defined Contribution Plans We also provide benefits under the BWXT Thrift Plan (the "Thrift Plan"). The Thrift Plan generally provides for matching employer contributions of 50% of the first 6% of compensation, as defined in the Thrift Plan, contributed by participants, and fully vest and are nonforfeitable after three years of service or upon retirement, death, lay-off or approved disability. These matching employer contributions are made in cash and invested at the employees' discretion. We also provide service-based cash contributions under the Thrift Plan to employees not accruing benefits under our defined benefit plans. 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 $47.4 million, $41.5 million and $37.6 million in the years ended December 31, 2024, 2023 and 2022, respectively. NOTE 8 – CAPITAL STOCK 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, 2024, we repurchased 249,442 shares of our common stock from public market transactions for $20.0 million. In the year ended December 31, 2023, we did not 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. As of December 31, 2024, we had approximately $377.6 million available to us for share repurchase under the $500 million authorization described above. NOTE 9 – STOCK-BASED COMPENSATION BWX Technologies, Inc. 2020 Omnibus Incentive Plan In May 2020, our stockholders approved the 2020 Omnibus Incentive Plan (the "2020 Plan") which succeeded the 2010 Long-Term Incentive Plan of BWX Technologies, Inc. (the "2010 Plan"). Members of the Board of Directors, executive officers, key employees and consultants are eligible to participate in the 2020 Plan. The Compensation Committee of the Board of Directors selects the participants for the 2020 Plan. The 2020 Plan provides for cash awards and equity-based compensation in the form of stock options, restricted stock, restricted stock units, performance shares and performance units, subject to satisfaction of specific performance goals. Shares subject to awards under either the 2020 Plan or the 2010 Plan that are cancelled, forfeited, terminated or expire unexercised, shall immediately become available for the granting of awards under the 2020 Plan. As of the effective date of the 2020 Plan, shares available for grant under the 2010 Plan are available for grant under the 2020 Plan. In addition, our stockholders approved an additional 1,450,000 shares of common stock for issuance through the 2020 Plan. Options to purchase shares are granted at not less than 100% of the fair market value closing price on the date of grant, become exercisable at such time or times as determined when granted and expire not more than ten years after the date of grant. At December 31, 2024, we had a total of 2,990,075 shares of our common stock available for future awards. In the event of a change in control of the Company, the terms of the awards under the 2020 Plan contain provisions that may cause restrictions to lapse and accelerate the vesting of awards. 2010 Long-Term Incentive Plan of BWX Technologies, Inc. Members of the Board of Directors, executive officers, key employees and consultants were eligible to participate in the 2010 Plan prior to it being succeeded by the 2020 Plan. The Compensation Committee of the Board of Directors selected the participants for the 2010 Plan. The 2010 Plan provided for 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. Shares subject to award under the 2010 Plan that are cancelled, forfeited, terminated or expire unexercised, shall immediately become available for the granting of awards under the 2020 Plan. As part of the approval of the 2010 Plan, 10,000,000 shares of common stock were initially authorized for issuance, with an additional 2,300,000 authorized for issuance in 2014. Options to purchase shares are granted at not less than 100% of the fair market value closing price on the date of grant, become exercisable at such time or times as determined when granted and expire not more than ten years after the date of grant. Long-Term Incentive Plan of BWXT Technical Services Group, Inc. In June 2012, we established the 2012 Long-Term Incentive Plan of BWXT Technical Services Group, Inc., a cash-settled plan for employees of certain subsidiaries and unconsolidated affiliates as selected by the plan committee. The cash- 78 Table of Contents settled plan provides for a number of forms of stock-based compensation, including stock appreciation rights, restricted stock units and performance units, subject to satisfaction of specific performance goals. Stock appreciation rights are granted at not less than 100% of the fair market value closing price of a share of BWXT common stock on the date of grant, become exercisable at such time or times as determined when granted and expire not more than ten years after the date of grant. Stock appreciation rights are cash-settled for the excess of the market price of BWXT common stock on the exercise date minus the exercise price. Restricted stock units and performance units are cash-settled upon vesting as determined when granted. We will not issue any shares of BWXT common stock under this plan, as all awards are cash-settled. In the event of a change in control of the Company, the terms of the awards under the cash-settled plan contain provisions that may cause restrictions to lapse and accelerate the vesting of awards. Stock-based compensation expense for all of our plans recognized for the years ended December 31, 2024, 2023 and 2022 totaled $21.8 million, $16.2 million and $14.6 million, respectively, with associated tax benefit totaling $3.6 million, $2.6 million and $2.3 million, respectively. As of December 31, 2024, unrecognized estimated compensation expense related to nonvested awards was $24.5 million, which is expected to be recognized over a weighted-average period of 1.8 years. Stock Options The following table summarizes activity for our stock options for the year ended December 31, 2024 (share data in thousands): Number of Shares Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (In Years) Aggregate Intrinsic Value (In millions) Outstanding at beginning of period 183 $ 54.73 Granted 96 $ 100.83 Exercised (25) $ 29.08 Cancelled/expired/forfeited (4) $ 15.93 Outstanding at end of period 250 $ 74.94 8.2 $ 9.1 Exercisable at end of period 58 $ 53.91 6.5 $ 3.3 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, 2024. The intrinsic value is calculated as the total number of option shares 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 options. This amount changes based on the price of our common stock. During the years ended December 31, 2024, 2023 and 2022, the total intrinsic value of stock options exercised was $1.7 million, $2.8 million and $1.2 million, respectively. The actual tax benefits realized related to the stock options exercised during the year ended December 31, 2024 totaled $0.4 million. 79 Table of Contents Restricted Stock Units Nonvested restricted stock units as of December 31, 2024 and changes during the year ended December 31, 2024 were as follows (share data in thousands): Number of Shares Weighted- Average Grant Date Fair Value Nonvested at beginning of period 223 $ 55.47 Granted 70 $ 99.51 Vested (125) $ 59.61 Cancelled/forfeited (8) $ 68.00 Nonvested at end of period 160 $ 71.80 The actual tax benefits realized related to the restricted stock units vested during the year ended December 31, 2024 totaled $2.1 million. Performance Shares Nonvested performance shares as of December 31, 2024 and changes during the year ended December 31, 2024 were as follows (share data in thousands): Number of Shares Weighted- Average Grant Date Fair Value Nonvested at beginning of period 520 $ 55.26 Adjustment to assumed vesting percentage 60 $ 85.07 Granted 115 $ 113.51 Vested (109) $ 59.38 Cancelled/forfeited (11) $ 67.13 Nonvested at end of period 575 $ 69.27 The actual number of shares in which each participant vests is contingent upon achievement of a mix of certain targets (depending on the grant year), including return on invested capital; earnings before interest, taxes, depreciation and amortization; total shareholder return and diluted earnings per share, over a three-year performance period. The number of shares in which participants can vest ranges from 0 to 200% of the initial performance shares granted, to be determined upon completion of the three-year performance period. The nonvested shares at the end of the period in the table above assumes weighted-average vesting of 144%. The actual tax benefits realized related to the performance shares vested during the year ended December 31, 2024 totaled $1.4 million. Cash-Settled Stock Appreciation Rights As of December 31, 2024, we did not have any cash-settled stock appreciation rights outstanding. Cash-Settled Restricted Stock Units As of December 31, 2024, we had 456 nonvested units valued at $111.39 per share. The fair value is based on our closing stock price as of December 31, 2024 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 The actual number of units in which each participant vests is dependent upon achievement of certain return on invested capital and diluted earnings per share targets over a three-year performance period. The number of units in which participants 80 Table of Contents can vest ranges from 0 to 200% of the initial performance units granted, to be determined upon completion of the three-year performance period. As of December 31, 2024, we had 2,052 nonvested units valued at $111.39 per share with an assumed weighted-average vesting of 153%. The fair value is based on our closing stock price as of December 31, 2024 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 Investigations and Litigation Due to the nature of our business, we are, from time to time, involved in investigations, litigation, disputes or claims related to our business activities, including, among other things: • performance- or warranty-related matters under our customer and supplier contracts and other business arrangements; and • workers' compensation, employment, waste storage and handling, premises liability and other claims. Based upon our prior experience, we do not expect that any of these investigations, litigation proceedings, disputes and claims will have a material adverse effect on our consolidated financial condition, results of operations or cash flows. Environmental Matters We have been identified as a potentially responsible party at various cleanup sites under the Comprehensive Environmental Response, Compensation, and Liability Act, as amended ("CERCLA") and other environmental laws. These laws can impose liability for the entire cost of cleanup on any of the potentially responsible parties, regardless of fault or the lawfulness of the original conduct. Generally, however, where there are multiple responsible parties, a final allocation of costs is made based on the amount and type of wastes disposed of by each party and the number of financially viable parties, although this may not be the case with respect to any particular site. We have not been determined to be a major contributor of wastes to any of these sites. On the basis of the relative contribution of waste to each site by potentially responsible parties, as well as the financial solvency of other potentially responsible parties, we expect our share of the ultimate liability for the various sites will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows in any given year. We perform significant amounts of work for the U.S. Government under both prime contracts and subcontracts and operate certain facilities that are licensed to possess and process special nuclear materials. As a result of these activities, we are subject to continuing reviews by governmental agencies, including the U.S. Environmental Protection Agency and the NRC. We are also involved in manufacturing activities at licensed facilities in Canada that are subject to continuing reviews by governmental agencies in Canada, including the CNSC. The NRC's decommissioning regulations require our Government Operations segment to provide financial assurance that it will be able to pay the expected cost of decommissioning its two licensed facilities at the end of their service lives. We provided financial assurance totaling $68.1 million and $68.1 million during the years ended December 31, 2024 and 2023, respectively, with surety bonds for the ultimate decommissioning of these licensed facilities. These facilities have provisions in their government contracts pursuant to which substantially all of our decommissioning costs and financial assurance obligations are covered by the DOE, including the costs to complete the decommissioning projects underway at the facility in Erwin, Tennessee. The surety bonds noted above are to cover decommissioning required pursuant to work not subject to this DOE obligation. In Canada, the CNSC's decommissioning regulations require our Commercial Operations segment to provide financial assurance that it will be able to pay the expected cost of decommissioning its CNSC-licensed facilities at the end of their service lives. We provided financial assurance totaling $28.5 million and $44.3 million during the years ended December 31, 2024 and 2023, respectively, with letters of credit and surety bonds for the ultimate decommissioning of these licensed facilities. Our compliance with federal, foreign, state and local environmental control and protection regulations resulted in pre-tax charges of approximately $22.7 million, $20.0 million and $20.0 million in the years ended December 31, 2024, 2023 and 2022, respectively. In addition, compliance with existing environmental regulations necessitated capital expenditures of $0.8 million, $0.7 million and $1.6 million in the years ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024 and 2023, we had total environmental accruals (including asset retirement obligations) of $103.4 million and $101.1 million, 81 Table of Contents respectively. Of our total environmental accruals at December 31, 2024 and 2023, $9.2 million and $10.6 million, respectively, were included in current liabilities. Inherent in the estimates of these accruals are our expectations regarding the levels of contamination, decommissioning costs and recoverability from other parties, which may vary significantly as decommissioning activities progress. Accordingly, changes in estimates could result in material adjustments to our operating results, and the ultimate loss may differ materially from the amounts that we have provided for in our consolidated financial statements. NOTE 11 – RISKS AND UNCERTAINTIES Revenue Recognized Over Time As of December 31, 2024, in accordance with the method of recognizing revenue over time, we have provided for our estimated costs to complete all of our ongoing contracts. However, it is possible that current estimates could change due to unforeseen events, which could result in adjustments to overall contract costs. The risk on fixed-price contracts is that revenue from the customer does not cover increases in our costs. 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. Alternatively, reductions in overall contract costs at completion could materially improve our consolidated financial condition, results of operations and cash flows. Insurance Upon the February 22, 2006 effectiveness of the settlement relating to the Chapter 11 proceedings involving several of our former subsidiaries, most of our subsidiaries contributed substantial insurance rights to the asbestos personal injury trust, including rights to (1) certain pre-1979 primary and excess insurance coverages and (2) certain of our 1979-1986 excess insurance coverage. These insurance rights provided coverage for, among other things, asbestos and other personal injury claims, subject to the terms and conditions of the policies. The contribution of these insurance rights was made in exchange for the agreement on the part of the representatives of the asbestos claimants, including the representative of future claimants, to the entry of a permanent injunction, pursuant to Section 524(g) of the U.S. Bankruptcy Code, to channel to the asbestos trust all asbestos-related general liability claims against our subsidiaries and former subsidiaries arising out of, resulting from or attributable to their operations, and the implementation of related releases and indemnification provisions protecting those subsidiaries and their affiliates from future liability for such claims. Although we are not aware of any significant, unresolved claims against our subsidiaries and former subsidiaries that are not subject to the channeling injunction and that relate to the periods during which such excess insurance coverage related, with the contribution of these insurance rights to the asbestos personal injury trust, it is possible that we could have underinsured or uninsured exposure for non-derivative asbestos claims or other personal injury or other claims that would have been insured under these coverages had the insurance rights not been contributed to the asbestos personal injury trust. On June 30, 2015, we completed the spin-off of our former Power Generation business (the "spin-off") into an independent, publicly traded company named Babcock & Wilcox Enterprises, Inc. ("BWE"). In conjunction with the spin-off, claims and liabilities associated with the asbestos personal injury, property damage and indirect property damage claims mentioned above have been expressly assumed by BWE pursuant to the master separation agreement between us and BWE. NOTE 12 – FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK The primary customer of our Government Operations segment is the U.S. Government, including some of its contractors. Our Commercial Operations segment's major customers are large utilities. These concentrations of customers may impact our overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in economic or other conditions. In the years ended December 31, 2024, 2023 and 2022, U.S. Government contracts accounted for approximately 76%, 75% and 76% of our total consolidated revenues, respectively. Accounts receivable due directly or indirectly from the U.S. Government represented 40% and 63% of net receivables at December 31, 2024 and 2023, respectively. In the years ended December 31, 2024, 2023 and 2022, revenues from two large utility customers accounted for approximately 14%, 14% and 14% of our total consolidated revenues, respectively. Accounts receivable due directly from two large utility customers represented 19% and 21% of net receivables at December 31, 2024 and 2023, respectively. See Note 15 for additional information about our major customers. We believe that our provision for possible losses on uncollectable accounts receivable is adequate for our credit loss exposure. At December 31, 2024 and 2023, the allowances for possible losses that we deducted from Accounts receivable – trade, net on our consolidated balance sheets were $0.3 million and $0.3 million, respectively. 82 Table of Contents NOTE 13 – INVESTMENTS The following is a summary of our investments at December 31, 2024: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In thousands) Equity securities Mutual funds $ 7,699 $ 1,076 $ — $ 8,775 Available-for-sale securities Corporate bonds 1,479 355 — 1,834 Total $ 9,178 $ 1,431 $ — $ 10,609 The following is a summary of our investments at December 31, 2023: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In thousands) Equity securities Mutual funds $ 7,002 $ 711 $ — $ 7,713 Available-for-sale securities Corporate bonds 1,479 304 — 1,783 Total $ 8,481 $ 1,015 $ — $ 9,496 NOTE 14 – FAIR VALUE MEASUREMENTS FASB Topic Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. This topic also sets forth the disclosure requirements regarding fair value and establishes a hierarchy for valuation inputs that emphasizes the use of observable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy established by this topic is as follows: • Level 1 – inputs are based upon quoted prices for identical instruments traded in active markets. • Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for similar or identical instruments in inactive markets and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets and liabilities. • Level 3 – inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar valuation techniques. In accordance with FASB Topic Fair Value Measurements , certain investments that were measured at net asset value per share (or its equivalent) ("NAV") have not been classified in the fair value hierarchy. These investments are measured on the fair value of the underlying investments but may not be redeemable at that fair value. Certain of these investments are subject to customary redemption notice periods of up to 90 days. When appropriate, we adjust these net asset values for contributions and distributions, if any, made during the period beginning on the latest NAV valuation date and ending on our measurement date. We also consider available market data, relevant index returns, preliminary estimates from our investees and other data obtained through research and consultation with third-party advisors in determining the fair value of these investments. The following sections describe the valuation methodologies we use to measure the fair values of our investments, derivatives and nonrecurring fair value measurements. 83 Table of Contents Investments 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. This pricing methodology applies to our Level 1 and Level 2 investments. Fair Value Measurements The following is a summary of our investments measured at fair value at December 31, 2024: 12/31/2024 Level 1 Level 2 Level 3 Unclassified (In thousands) Equity securities Mutual funds $ 8,775 $ — $ 8,775 $ — $ — Available-for-sale securities Corporate bonds 1,834 1,834 — — — Total $ 10,609 $ 1,834 $ 8,775 $ — $ — The following is a summary of our investments measured at fair value at December 31, 2023: 12/31/2023 Level 1 Level 2 Level 3 Unclassified (In thousands) Equity securities Mutual funds $ 7,713 $ — $ 7,713 $ — $ — Available-for-sale securities Corporate bonds 1,783 1,783 — — — Total $ 9,496 $ 1,783 $ 7,713 $ — $ — Derivatives Level 2 derivative assets and liabilities currently consist of FX forward contracts. Where applicable, the value of these derivative assets and liabilities is computed by discounting the projected future cash flow amounts to present value using market-based observable inputs, including FX forward and spot rates, interest rates and counterparty performance risk adjustments. At December 31, 2024 and 2023, we had FX forward contracts outstanding to purchase or sell foreign currencies, primarily Canadian dollars and Euros, with a total fair value of $8.2 million and $(9.9) million, respectively. Other Financial Instruments We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments: Cash and cash equivalents and restricted cash and cash equivalents . The carrying amounts that we have reported in the accompanying consolidated balance sheets for Cash and cash equivalents and Restricted cash and cash equivalents approximate their fair values due to their highly liquid nature. Long-term and short-term debt . We base the fair values of debt instruments, including our Senior Notes, on quoted market prices. Where quoted prices are not available, we base the fair values on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. At December 31, 2024 and 2023, the fair value of our Senior Notes due 2028 was $374.6 million and $367.7 million, respectively. At December 31, 2024 and 2023, the fair value of our Senior Notes due 2029 was $371.9 million and $367.0 million, respectively. The fair value of our remaining debt instruments approximated their carrying values at December 31, 2024 and 2023. 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, 2024, the carrying value of our note receivable was $6.5 million and approximated its fair value. 84 Table of Contents NOTE 15 – SEGMENT REPORTING As described in Note 1, our operations are assessed based on two reportable segments. The operations of our segments are managed separately, and each segment has unique technology, services and customer classes. We account for intersegment sales at prices that we generally establish by reference to similar transactions with unaffiliated customers. Reportable segments are measured based on operating income exclusive of general corporate expenses and gains (losses) on sales of corporate assets. Segment operating income is derived directly from our internal management reporting system and the accounting policies that we use to derive segment operating income are identical to those the consolidated company uses. Information about our Segments: Year Ended December 31, 2024 2023 2022 (In thousands) REVENUES: Government Operations $ 2,183,040 $ 2,031,337 $ 1,808,483 Commercial Operations 523,972 466,344 427,358 Eliminations (3,358) (1,372) (3,007) $ 2,703,654 $ 2,496,309 $ 2,232,834 SEGMENT EXPENSES: Government Operations: Research and Development Costs $ 6,306 $ 6,459 $ 6,738 Losses (Gains) on Asset Disposals and Impairments, Net 2,462 1,043 (250) Other Segment Expenses (1) 1,852,328 1,699,960 1,511,467 $ 1,861,096 $ 1,707,462 $ 1,517,955 Commercial Operations: Research and Development Costs $ 1,172 $ 1,154 $ 2,797 Losses (Gains) on Asset Disposals and Impairments, Net 57 (9) 6,233 Other Segment Expenses (1) 475,927 427,667 390,910 477,156 428,812 399,940 Total Segment Expenses $ 2,338,252 $ 2,136,274 $ 1,917,895 OPERATING INCOME: Government Operations $ 377,875 $ 374,682 $ 336,501 Commercial Operations 46,816 37,532 27,418 $ 424,691 $ 412,214 $ 363,919 Unallocated Corporate (2) (44,084) (29,155) (15,348) Total Operating Income (3) $ 380,607 $ 383,059 $ 348,571 Other Income (Expense) (31,887) (61,659) (34,194) Income before Provision for Income Taxes $ 348,720 $ 321,400 $ 314,377 (1) Other segment expenses include the total cost of operations and selling, general and administrative expenses. (2) Unallocated Corporate includes general corporate overhead not allocated to segments in addition to losses on asset disposals and impairments, net. In the years ended December 31, 2024, 2023 and 2022, Unallocated Corporate includes losses (gains) on asset disposals and impairments, net of $1.9 million, $0.0 million and $(0.5) million, respectively. (3) The following amounts are included in Operating Income: Equity in Income of Investees : Government Operations $ 55,931 $ 50,807 $ 45,973 Commercial Operations — — — $ 55,931 $ 50,807 $ 45,973 85 Table of Contents Year Ended December 31, 2024 2023 2022 (In thousands) CAPITAL EXPENDITURES: Government Operations $ 81,063 $ 91,699 $ 103,093 Commercial Operations 62,773 53,358 88,853 Segment Capital Expenditures 143,836 145,057 191,946 Corporate Capital Expenditures 9,811 6,229 6,366 Total Capital Expenditures $ 153,647 $ 151,286 $ 198,312 DEPRECIATION AND AMORTIZATION: Government Operations $ 61,027 $ 53,388 $ 47,982 Commercial Operations 17,708 17,745 18,805 Segment Depreciation and Amortization 78,735 71,133 66,787 Corporate Depreciation and Amortization 7,127 7,433 7,055 Total Depreciation and Amortization $ 85,862 $ 78,566 $ 73,842 Information about our Product and Service Lines: Year Ended December 31, 2024 2023 2022 (In thousands) REVENUES: Government Operations: Nuclear Components and Fuel $ 1,692,218 $ 1,610,183 $ 1,494,810 Uranium Processing and Nuclear Services 287,014 276,690 233,197 Advanced Reactor Design and Engineering 203,808 144,464 80,476 2,183,040 2,031,337 1,808,483 Commercial Operations: Nuclear Manufacturing 288,772 231,944 221,458 Nuclear Services and Engineering 235,200 234,400 205,900 523,972 466,344 427,358 Eliminations (3,358) (1,372) (3,007) $ 2,703,654 $ 2,496,309 $ 2,232,834 Information about our Consolidated Operations in Different Geographic Areas: December 31, 2024 2023 2022 (In thousands) NET PROPERTY, PLANT AND EQUIPMENT: United States $ 813,352 $ 784,062 $ 743,767 Canada 462,593 442,755 389,490 United Kingdom 2,216 1,703 1,640 $ 1,278,161 $ 1,228,520 $ 1,134,897 See Note 3 for revenues by geographic area for each of our segments. 86 Table of Contents Information about our Major Customers: In the years ended December 31, 2024, 2023 and 2022, sales to the U.S. Government accounted for approximately 95%, 93% and 94% of our Government Operations segment revenues, respectively. In the years ended December 31, 2024, 2023 and 2022, sales to large utility customers accounted for approximately 71%, 77% and 74% of our Commercial Operations segment revenues, respectively. Evaluation of segment performance: Our CODM is the Company's President and Chief Executive Officer. Our CODM measures the performance of each segment based on several metrics, including revenue and operating income and uses these results, in part, to evaluate the performance of and to allocate resources to each segment. Our CODM does not use assets by segment to evaluate segment performance or allocate resources. Consequently, we do not disclose assets by segment. NOTE 16 – QUARTERLY FINANCIAL DATA (UNAUDITED) The following tables set forth selected unaudited quarterly financial information for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 Quarter Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 (In thousands, except per share amounts) Revenues $ 603,966 $ 681,465 $ 671,956 $ 746,267 Operating income (1) $ 92,961 $ 98,806 $ 96,578 $ 92,262 Equity in income of investees $ 13,203 $ 11,584 $ 15,532 $ 15,612 Net Income Attributable to BWX Technologies, Inc. $ 68,468 $ 72,972 $ 69,483 $ 71,018 Earnings per common share: Basic: Net Income Attributable to BWX Technologies, Inc. $ 0.75 $ 0.80 $ 0.76 $ 0.78 Diluted: Net Income Attributable to BWX Technologies, Inc. $ 0.75 $ 0.79 $ 0.76 $ 0.77 (1) Includes equity in income of investees. Year Ended December 31, 2023 Quarter Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 (In thousands, except per share amounts) Revenues $ 568,360 $ 612,445 $ 589,989 $ 725,515 Operating income (1) $ 87,842 $ 86,666 $ 85,358 $ 123,193 Equity in income of investees $ 13,645 $ 12,568 $ 12,649 $ 11,945 Net Income Attributable to BWX Technologies, Inc. $ 61,092 $ 58,597 $ 60,273 $ 65,887 Earnings per common share: Basic: Net Income Attributable to BWX Technologies, Inc. $ 0.67 $ 0.64 $ 0.66 $ 0.72 Diluted: Net Income Attributable to BWX Technologies, Inc. $ 0.67 $ 0.64 $ 0.66 $ 0.72 (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. 87 Table of Contents We immediately recognize actuarial gains (losses) for our pension and postretirement benefit plans in earnings as a component of net periodic benefit cost. Recorded in the quarters ended December 31, 2024 and 2023, the effects of these adjustments on pre-tax income were $(10.6) million and $(30.8) million, respectively. NOTE 17 – EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Year Ended December 31, 2024 2023 2022 (In thousands, except shares and per share amounts) Basic: Net Income Attributable to BWX Technologies, Inc. $ 281,941 $ 245,849 $ 238,191 Weighted-average common shares 91,572,674 91,619,156 91,447,088 Basic earnings per common share $ 3.08 $ 2.68 $ 2.60 Diluted: Net Income Attributable to BWX Technologies, Inc. $ 281,941 $ 245,849 $ 238,191 Weighted-average common shares (basic) 91,572,674 91,619,156 91,447,088 Effect of dilutive securities: Stock options, restricted stock units and performance shares (1) 287,058 255,381 255,023 Adjusted weighted-average common shares 91,859,732 91,874,537 91,702,111 Diluted earnings per common share $ 3.07 $ 2.68 $ 2.60 (1) At December 31, 2024, 2023 and 2022, we excluded 64,575, 6,089 and 10,419 shares, respectively, from our diluted share calculation as their effect would have been antidilutive. 88 Table of Contents Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.