BWX Technologies’ first quarter drew a negative market reaction despite surpassing Wall Street’s revenue and non-GAAP earnings per share expectations. Management attributed this performance to robust demand across both government and commercial operations, strong bookings in its commercial segment, and accelerated work timelines. CEO Rex Geveden noted the importance of “solid execution across our businesses and an increased pace of work and timing of material procurement.” However, margin pressure emerged due to higher raw material costs and shifts in business mix, particularly within commercial operations.
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BWX (BWXT) Q1 CY2025 Highlights:
- Revenue: $682.3 million vs analyst estimates of $648.9 million (13% year-on-year growth, 5.1% beat)
- Adjusted EPS: $0.91 vs analyst estimates of $0.76 (19% beat)
- Adjusted EBITDA: $129.8 million vs analyst estimates of $118.6 million (19% margin, 9.4% beat)
- The company reconfirmed its revenue guidance for the full year of $3 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $3.47 at the midpoint
- EBITDA guidance for the full year is $560 million at the midpoint, above analyst estimates of $554.4 million
- Operating Margin: 14.2%, down from 15.4% in the same quarter last year
- Backlog: $4.88 billion at quarter end
- Market Capitalization: $12.87 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions BWX’s Q1 Earnings Call
- Scott Deuschle (Deutsche Bank) asked about the impact of negative estimate-at-completion (EAC) adjustments and how the company offset them. CFO Robb LeMasters explained the EACs were split between government and commercial segments, with commercial operations affected by zirconium costs but expected to recover later in the year.
- Pete Skibitski (Alembic Global) inquired about the reconciliation bill’s potential for additional government support. CEO Rex Geveden said that while the current funding offers little direct benefit, future legislative developments could accelerate defense enrichment contracts.
- Bob Labick (CJS Securities) questioned the timeline for FDA approval of BWXT’s molybdenum-99 radiopharmaceutical and implications for 2026 contracting. Geveden stated approval may still come in 2025 but could slip into early 2026, emphasizing ongoing technical refinements.
- Thomas Meric (Janney Montgomery) sought details on the enrichment contract’s pilot phase, particularly BWXT’s opportunity in high-assay low-enriched uranium (HALEU) markets. Geveden described the project as in early conceptual stages, with significant government interest but commercial outcomes still uncertain.
- Andre Madrid (BTIG) asked about managing supply chain and tariff risks for zirconium and future AUKUS program participation. Geveden and LeMasters highlighted customer relationships and pass-through mechanisms for material costs, while noting AUKUS-related scope remains undefined but could provide upside.
Catalysts in Upcoming Quarters
In future quarters, our analysts will focus on (1) progress toward margin recovery as raw material cost pass-throughs take effect, (2) the successful integration and performance impact of the Kinectrics acquisition, and (3) updates on government contract wins and the ramp-up of new projects like DUECE and AUKUS. Execution on nuclear medicine product approvals and commercialization will also be key for sustained growth.
BWX currently trades at $142, up from $112.04 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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