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Item 7. Management’s Discussion and Analysis

2026-02-23 compared with 2025-02-24 · 96 added, 70 removed, 262 unchanged (39% of the section changed)

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$ 4,318 $ 36,770 $ 24,813

(1) During the year ended December 31, 2025, our Government Operations segment results were favorably impacted by material contract adjustments related to a nuclear operations contract.

The material adjustments resulted in an increase in revenue and operating income of $29.4 million during the year ended December 31, 2025.

During the year ended December 31, 2024, no adjustments to any one contract had a material impact on our consolidated financial statements.

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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.

Contracts may be modified at the request of our customer or initiated by us to amend all or part of an existing contract, including contract type.

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Discount Rate:

Effect on ongoing net periodic benefit cost (1)

$ 0.6 $ (0.7)

Effect on projected benefit obligation $ (40.2) $ 42.3

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Consolidated revenues increased 18.3%, or $494.8 million, to $3,198.4 million in the year ended December 31, 2025 compared to $2,703.7 million in 2024, due to increases in revenues in our Government Operations and Commercial Operations segments of $167.1 million and $329.1 million, respectively.

Consolidated operating income decreased $2.5 million to $380.6 million in the year ended December 31, 2024 compared to $383.1 million in 2023.

Consolidated operating income increased $23.9 million to $404.5 million in the year ended December 31, 2025 compared to $380.6 million in 2024.

Operating income in our Government Operations and Commercial Operations segments increased $16.8 million and $10.9 million, respectively.

These increases were more than offset by an increase in Unallocated Corporate expenses of $15.8 million when compared to the prior year.

These increases were partially offset by an increase in Unallocated Corporate expenses of $4.0 million when compared to the prior year.

Government Operations

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Revenues increased 7.7%, or $167.1 million, to $2,350.1 million in the year ended December 31, 2025 compared to $2,183.0 million in 2024.

The increase was primarily driven by higher volume in the manufacture of nuclear components for U.S.

Government programs of $138.7 million when compared to the prior year.

Continued growth in design and engineering work executed by our advanced technologies business, particularly in the defense market, resulted in additional revenues of $62.2 million.

These increases were partially offset by a decrease in revenues associated with our downblending operations as well as a decrease in revenues caused by the timing of long-lead material procurements of $36.5 million and $24.7 million, respectively.

Operating income increased $3.2 million to $377.9 million in the year ended December 31, 2024 compared to $374.7 million in 2023, primarily driven by the operating income impact of the changes in revenues noted above.

The increase was primarily driven by the timing of long-lead material procurements of $83.4 million, increases in uranium processing and downblending operations of $68.1 million and an increase in revenues of $52.2 million associated with the acquisition of A.O.T., which was completed on January 3, 2025.

These increases were partially offset by a decrease in revenues associated with our advanced technologies business.

Operating income increased $17.0 million to $394.9 million in the year ended December 31, 2025 compared to $377.9 million in 2024, primarily driven by the operating income impact of the changes in revenues noted above which was partially offset by a $13.1 million increase in expenses associated with due diligence and post-acquisition integration activities as well as restructuring-related activities when compared to the prior year.

Commercial Operations

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Revenues increased 62.8%, or $329.1 million, to $853.1 million in the year ended December 31, 2025 compared to $524.0 million in 2024.

The increase was primarily related to higher revenues in nuclear components, medical radioisotopes, fuel handling and fuel fabrication, partially offset by lower revenues related to on-site refurbishment work when compared to the prior year.

The increase was primarily related to the acquisition of Kinectrics, completed on May 20, 2025, which resulted in an increase in revenues of $231.0 million as well as an increase in revenues related to components manufacturing of $74.0 million.

Operating income increased $10.9 million to $57.7 million in the year ended December 31, 2025 compared to $46.8 million in 2024.

The increase was primarily due to the increase in revenues noted above as well as a favorable shift in our product mix which was partially offset by a $4.4 million increase in expenses associated with due diligence and restructuring-related activities when compared to the prior year.

The increase was primarily due to the increase in revenues noted above, which was partially offset by a $19.9 million increase in expenses associated with due diligence and post-acquisition integration activities as well as restructuring-related activities when compared to the prior year.

Unallocated Corporate

Unallocated Corporate expenses increased $4.0 million to $48.1 million in the year ended December 31, 2025 compared to $44.1 million in 2024.

During the third quarter of 2023, we undertook several initiatives to transform our current information technology infrastructure and to improve the effectiveness of our digital framework.

These initiatives are expected to continue into 2026 and accounted for increases in expense of $9.5 million for the year ended December 31, 2024.

We also experienced an increase in legal and consulting costs associated with due diligence activities of $4.5 million for the year ended December 31, 2024.

These increases were partially offset by a decrease in unallocated healthcare costs when compared to the prior year.

The increase was due to an increase in legal and consulting costs associated with merger and acquisition related activities of $3.9 million when compared to the corresponding period in the prior year.

We also experienced a $7.1 million increase in restructuring-related expenditures.

These increases were partially offset by a decrease in expenditures related to the transformation of our information technology infrastructure of $3.2 million.

Other Income (Expense)

During the year ended December 31, 2025, other income (expense) increased $25.5 million to a loss of $6.3 million compared to a loss of $31.9 million in 2024.

Included in other income (expense) are components of net periodic benefit cost, which include mark to market adjustments due to our immediate recognition of net actuarial gains (losses) for our pension and postretirement benefit plans which changed to a gain of $0.8 million during the year ended December 31, 2024 compared to a loss of $20.9 million for the year ended December 31, 2023.

This was caused by a decrease in losses related to mark to market adjustments totaling $20.2 million.

In addition, we experienced a decrease in interest expense of $7.6 million in 2024 when compared to the prior year due primarily to a decrease in borrowings coupled with a decline in the weighted-average interest rate on outstanding borrowings under our Credit Facility, as defined below.

Included in other income (expense) are components of net periodic benefit cost, which include mark to market adjustments due to our immediate recognition of net actuarial gains (losses) for our pension and postretirement benefit plans which changed to a gain of $15.2 million during the year ended December 31, 2025 compared to a gain of $0.8 million for the year ended December 31, 2024.

This was caused by favorable changes in income (expense) related to mark to market adjustments totaling $17.2 million.

In addition, we experienced an increase in interest expense of $4.7 million in 2025 when compared to the prior year due primarily to an increase in borrowings coupled with an increase in the weighted-average interest rate on outstanding borrowings under our Former Credit Facility, as defined below.

Other income (expense) also includes the effect of foreign currency transaction gains and losses as well as gains and losses on FX forward contracts which resulted in a net increase in other income (expense) of $17.7 million when compared to the prior year.

Provision for Income Taxes

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Effective Tax Rate

For the year ended December 31, 2024, our provision for income taxes decreased $8.7 million to $66.4 million, while income before provision for income taxes increased $27.3 million to $348.7 million when compared to the prior year.

For the year ended December 31, 2025, our provision for income taxes increased $1.8 million to $68.3 million, while income before provision for income taxes increased $49.4 million to $398.1 million when compared to the prior year.

Our effective tax rate was 17.1% for the year ended December 31, 2025 compared to 19.0% for the year ended December 31, 2024.

Our effective tax rate for the year ended December 31, 2024 was lower than the U.S.

Our effective tax rate for the years ended December 31, 2025 and 2024 were lower than the U.S.

corporate income tax rate of 21% primarily due to increased benefits from U.S.

federal research and development tax credits.

Our effective tax rate for the year ended December 31, 2023 was higher than the U.S.

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

and the unfavorable rate differential associated with our non-U.S.

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

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In order to minimize the negative impact of inflation on our operations, we attempt to cover the increased cost of anticipated changes in labor, material and service costs, either through an estimate of those changes, which we reflect in the original price, or through price escalation clauses in our contracts.

However, there can be no assurance we will be able to cover all changes in cost using this strategy.

However, there can be no assurance we will be able to mitigate all increases in cost using this strategy.

Liquidity and Capital Resources

Our overall liquidity position, which we generally define as our unrestricted cash and cash equivalents plus amounts available for borrowings under our credit facility, increased by approximately $148.6 million to $797.7 million at December 31, 2024 compared to $649.1 million at December 31, 2023, primarily attributable to improvements in operating cash flows which were used, in part, to repay borrowings under our Revolving Credit Facility, as defined below.

We experienced net cash generated from operations in each of the years ended December 31, 2024, 2023 and 2022.

Our overall liquidity position, which we generally define as our unrestricted cash and cash equivalents plus amounts available for borrowings under our credit facility, increased by approximately $950.7 million to $1,748.4 million at December 31, 2025 compared to $797.7 million at December 31, 2024, primarily attributable to the issuance of $1.25 billion of 0% Convertible Senior Notes due 2030 (the "2030 Notes") and an increase of $250 million in available borrowings from our New Credit Facility.

These were offset partially by repayments on the Term Loan and Capped Call Transaction premiums.

We generated net cash from operations in each of the years ended December 31, 2025, 2024 and 2023.

Typically, the fourth quarter has been the period of highest cash flows from operating activities because of the timing of payments received from the U.S.

Government on accounts receivable retainages and cash dividends received from our joint ventures.

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 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 were required to make quarterly amortization payments on the Term Loan in an amount equal to 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 are now required to make quarterly amortization payments in an amount equal to 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.

New Credit Facility

On November 10, 2025, we entered into a second Amended and Restated Credit Agreement (the "New 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 "Revolving Credit Facility") and a $250 million senior secured term A loan (the "Term Loan").

The Revolving Credit Facility and the Term Loan were repaid, in their entirety, with the proceeds from the 2030 Notes as discussed below.

The New Credit Facility includes a $1.25 billion senior secured revolving credit facility.

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

The New Credit Facility is scheduled to mature on November 10, 2030, subject to an early maturity trigger if on any date the aggregate outstanding principal amount of unsecured indebtedness due within 91 days thereof is in excess of 100% of EBITDA, as defined in the New Credit Facility, for the last four full fiscal quarters.

However, this early maturity trigger will not apply if (1) the total Net Leverage Ratio is less than or equal to 2.00 to 1.00 or (2) liquidity is at least 125% of such outstanding unsecured indebtedness.

The Company’s obligations under the New Credit Facility are guaranteed by the same guarantors that guarantee the 2030 Notes.

The New Credit Facility is secured by first-priority liens on certain assets owned by the Company and the guarantors (other than its subsidiaries comprising a portion of its Government Operations segment), provided such liens may be released if the Company obtains investment grade ratings of at least BBB- from S&P or Baa3 from Moody's and no default or event of default exists.

The New Credit Facility allows for additional parties to become lenders and, subject to certain conditions, for the increase of the commitments under the New Credit Facility, subject to an aggregate maximum for all additional commitments of (1) the greater of (a) $600 million and (b) 100% of EBITDA, as defined in the New Credit Facility, for the last four full fiscal quarters, plus (2) additional amounts provided the Company is in compliance with a pro forma first lien leverage ratio test 3.00 to 1.00 or less.

Outstanding loans under the New Credit Facility bear interest at our option at either (i) the Term SOFR rate plus a margin ranging from 1.00% to 1.75% per year or (ii) the base rate (the highest of (x) the administrative agent's prime rate, (y) the Federal Funds rate plus 0.50% and (z) the Term SOFR rate for a one-month tenor plus 1.00%) plus a margin ranging from 0.0% to 0.75% per year.

In addition, the Company will be charged (1) a commitment fee of between 0.15% and 0.225% per year on the unused portion of the New Credit Facility, (2) a letter of credit fee of between 1.00% and 1.75% per year with respect to the amount of each financial letter of credit issued under the New Credit Facility, and (3) 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 or commercial letter of credit issued under the New Credit Facility.

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

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

The New Credit Facility contains representations and warranties, affirmative and negative covenants and events of default that the Company considers customary for an agreement of this type, including covenants setting a maximum consolidated total net leverage ratio and a minimum consolidated interest coverage ratio.

If any event of default relating to bankruptcy or other insolvency events occurs with respect to the Company, the lenders’ commitments under the New Credit Facility will automatically terminate and all outstanding obligations under the New Credit Facility will immediately become due and payable.

If any other event of default occurs, the lenders will be permitted to terminate their commitments under the New Credit Facility, accelerate all outstanding obligations under the New Credit Facility and exercise other rights and remedies, including the commencement of foreclosure or other actions against the collateral.

Based on the total net leverage ratio applicable at December 31, 2025, the margin for Term SOFR and base rate loans was 1.50% and 0.50%, respectively, the letter of credit fee for financial letters of credit and performance letters of credit was 1.50% and 0.90%, respectively, and the commitment fee for the unused portion of the New Credit Facility was 0.20%.

The New 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;

In addition, the New 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, 2025, we were in compliance with all covenants set forth in the New Credit Facility.

As of December 31, 2025, letters of credit issued under the New Credit Facility totaled $1.4 million and we had no outstanding borrowings and had $1,248.6 million available under the New Credit Facility for borrowings and to meet letter of credit requirements.

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

Under the New 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.

If any default occurs under the New Credit Facility, or if we are unable to make any of the representations and warranties in the New Credit Facility, we will be unable to borrow funds or have letters of credit issued under the New Credit Facility.

Senior Notes due 2028

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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.

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 New Credit Facility.

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.

We may redeem the Senior Notes due 2028, in whole or in part, at any time at a redemption price equal to 100.0% of the principal amount to be redeemed 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.

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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.

guarantors, and U.S.

Bank, as trustee.

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

We may redeem the Senior Notes due 2029, in whole or in part, at any time on or after April 15, 2024 at a redemption price equal to (i) 102.063% of the principal amount to be redeemed if the redemption occurs during the 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.

We may redeem the Senior Notes due 2029, in whole or in part, at any time on or after April 15, 2025 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 April 15, 2025 and (ii) 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.

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As of December 31, 2025, we were in compliance with all covenants set forth in the 2021 Indenture and the Senior Notes due 2029.

2030 Notes and Capped Call Transactions

In November 2025, the Company issued $1.25 billion aggregate principal amount of 0% Convertible Senior Notes due 2030 (the "2030 Notes"), including the exercise in full of the initial purchasers' option to purchase up to an additional $150.0 million principal amount of the 2030 Notes.

The 2030 Notes were issued pursuant to an Indenture, dated November 19, 2025 (the "Indenture"), among the Company, certain of our subsidiaries, as guarantors, and U.S.

Bank Trust Company, National Association, as trustee.

The 2030 Notes are guaranteed by each of the Company's present and future direct and indirect wholly owned domestic subsidiaries that guarantee its existing and future capital markets indebtedness.

The conversion rate for the 2030 Notes will initially be 3.8094 shares of common stock per $1,000 principal amount of the 2030 Notes, which is equivalent to an initial conversion price of approximately $262.51 per share of common stock.

The conversion rate is subject to adjustment upon certain events.

Upon conversion, the Company will settle conversions by paying cash up to the aggregate principal amount of the 2030 Notes to be converted and paying or delivering, as the case may be, cash, shares of common stock or a combination of cash and shares of common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the 2030 Notes being converted, based on the applicable conversion rate(s).

The 2030 Notes will mature on November 1, 2030, unless earlier converted, redeemed or repurchased.

The 2030 Notes will not bear regular interest, and the principal amount of the 2030 Notes will not accrete.

However, special interest and additional interest, if any, may accrue on the 2030 Notes at a combined rate per annum not exceeding 0.50% upon the occurrence of certain events as described in the Indenture.

The Company may not redeem the 2030 Notes at its option before November 6, 2028.

The Company will have the option to redeem the 2030 Notes, in whole or in part (subject to the partial redemption limitation described below), at any time, and from time to time, on or after November 6, 2028 and before the 26th Scheduled Trading Day (as defined in the Indenture) immediately before the maturity date, at a cash redemption price equal to the principal amount of the 2030 Notes to be redeemed, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the redemption date, but only if certain conditions are met.

On or after August 1, 2030, until the close of business on the second Scheduled Trading Day (as defined in the Indenture) immediately before the maturity date, the 2030 Notes will be convertible at the option of the noteholders at any time.

Before August 1, 2030, noteholders will have the right to convert their 2030 Notes only under the following circumstances:

(1) during any fiscal quarter commencing after the fiscal quarter ending on March 31, 2026, if the last reported sale price of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter;

(2) during the five consecutive business days immediately after any ten consecutive trading day period if the trading price per $1,000 principal amount of 2030 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of common stock on such trading day and the conversion rate on each Trading Day;

(3) upon the occurrence of specified corporate events or distributions on the common stock as set forth in the Indenture;

or (4) if the Company calls the 2030 Notes for redemption.

If the Company undergoes a Fundamental Change (as defined in the Indenture), then, subject to certain exceptions, noteholders may require the Company to repurchase their 2030 Notes in whole or in part for cash at a price equal to the principal amount of the 2030 Notes to be repurchased, plus accrued and unpaid special interest and additional interest, if any, to, but excluding, the Fundamental Change Repurchase Date (as defined in the Indenture).

The definition of Fundamental Change includes, among other things, certain business combination transactions involving the Company and certain de-listing events with respect to the common stock.

Capped Call Transactions

In connection with the pricing of the 2030 Notes and the exercise by the initial purchasers of their option in full to purchase additional 2030 Notes, respectively, the Company paid $131.9 million to enter into privately negotiated capped call transactions (the “Capped Call Transactions”) with affiliates of certain of the initial purchasers and certain other financial institutions (the “Option Counterparties”).

The Capped Call Transactions have an expiration date of November 1, 2030 but may be redeemed earlier, subject to certain conditions.

The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the 2030 Notes, the number of shares of common stock initially underlying the 2030 Notes.

The Capped Call Transactions are expected generally to reduce the potential dilution to the holders of common stock upon any conversion of the 2030 Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of converted 2030 Notes, as the case may be, with such reduction and/or offset subject to a cap.

The cap price of the Capped Call Transactions will initially be $396.24 per share of common stock, which represents a premium of 100% over the last reported sale price of the common stock of $198.12 per share on November 5, 2025, and is subject to certain adjustments under the terms of the Capped Call Transactions.

The Capped Call Transactions are separate transactions (in each case entered into by the Company with the Option Counterparties), are not part of the terms of the 2030 Notes and will not change the holders’ rights under the 2030 Notes.

Holders will not have any rights with respect to the Capped Call Transactions.

The Capped Call Transactions qualify for a scope exception from derivative accounting for instruments that are both indexed to the issuer's own stock and classified in stockholders' equity on our consolidated balance sheets.

The 2030 Notes and the Capped Call Transactions have been integrated for tax purposes.

The impact of this tax treatment results in the Capped Call Transactions being deductible with the cost of the Capped Call Transactions qualifying as original issue discount for tax purposes over the term of the 2030 Notes.

Other Arrangements

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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.

We utilize our New 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 New Credit Facility.

On May 14, 2025, we amended our bilateral letter of credit facility to increase the maximum aggregate amount to $75 million.

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 New Credit Facility, is adequate to support our existing requirements for the next 12 months.

As of December 31, 2025, letters of credit and bank guarantees issued and outstanding under our bilateral letter of credit facility totaled approximately $48.7 million, and such letters of credit and bank guarantees are secured by the collateral under our New Credit Facility.

Cash, Cash Equivalents, Restricted Cash and Investments

5 unchanged sentences

Total $ 515,447 $ 91,180

Our working capital increased by $13.0 million to $455.8 million at December 31, 2024 from $442.8 million at December 31, 2023, primarily attributable to the change in income taxes receivable and prepaid expenses which was partially offset by the timing of project cash flows.

Our working capital increased by $432.5 million to $888.3 million at December 31, 2025 from $455.8 million at December 31, 2024, primarily attributable to the change in cash and cash equivalents resulting from the issuance of long-term debt.

Our net cash provided by operating activities increased by $71.4 million to $479.8 million in the year ended December 31, 2025, compared to $408.4 million in the year ended December 31, 2024.

The increase in cash provided by operating activities was primarily attributable to the timing of project cash flows.

Our net cash used in investing activities decreased by $1.1 million to $154.6 million in the year ended December 31, 2024, compared to $155.6 million in the year ended December 31, 2023.

No single item had a significant impact on the change in cash used in investing activities.

Our net cash used in financing activities increased by $83.4 million to $252.8 million in the year ended December 31, 2024, compared to cash used in financing activities of $169.4 million in the year ended December 31, 2023.

The increase in cash used in financing activities was primarily attributable to a reduction in net borrowings of long-term debt of $75.0 million and an increase in repurchases of common stock of $20.0 million.

The increase in cash provided by operating activities was primarily attributable to the timing of project cash flows offset partially by decreases in deferred tax liabilities and pension liabilities.

Our net cash used in investing activities increased by $587.5 million to $742.1 million in the year ended December 31, 2025, compared to $154.6 million in the year ended December 31, 2024.

The increase in cash used in investing activities was primarily attributable to the acquisitions of A.O.T.

and Kinectrics for $101.1 million and $434.5 million, respectively, net of cash acquired.

Our net cash provided by financing activities increased by $946.4 million to $693.6 million in the year ended December 31, 2025, compared to cash used in financing activities of $252.8 million in the year ended December 31, 2024.

The increase in cash provided in financing activities was primarily attributable to the issuance of $1.25 billion of 2030 Notes offset partially by repayments on the Revolving Credit Facility and Term Loan and Capped Call Transaction premiums.

At December 31, 2025, we had long-term investments with a fair value of $8.2 million.

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

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

Government and the commercialization of our medical radioisotope technology and the expansion of our Cambridge, Ontario, Canada manufacturing plant for heavy commercial nuclear power equipment in our Commercial Operations segment.

We expect these heightened spending levels to decline as these capital expansion projects are largely complete.

4 unchanged sentences

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

As discussed in Note 2 to our consolidated financial statements included in this Report, on January 3, 2025, we completed the acquisition of A.O.T., for approximately $105.5 million, subject to certain working capital adjustments.

In addition, on December 27, 2024, we entered into an agreement to acquire Kinectrics for approximately CAD 782.7 million, including the assumption of Kinectrics' net pension and debt liabilities, and estimated transaction expenses.

The Kinectrics acquisition is targeted to close in the middle of 2025 at which time we expect to make a cash investment of approximately $525.0 million U.S.

dollar equivalent.

We expect cash requirements totaling approximately $12.7 million and $2.7 million for contributions to our pension plans and other postretirement benefit plans, respectively, in 2026.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis