BWX Technologies, Inc. Q4 FY2025 Earnings Call

Ladies and gentlemen, welcome to BWX Technologies Fourth Quarter and Full Year 2025 Earnings Conference Call. I would now like to turn the call over to our host, Chase Jacobson, BWXT's Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good evening, and welcome to today's call. Joining me are Rex Geveden, President and CEO; and Mike Fitzgerald, Senior Vice President and CFO. On today's call, we will reference the fourth quarter and full year 2025 earnings presentation that is available on the Investors section of the BWXT website. We will also discuss certain matters that constitute forward-looking statements. These statements involve risks and uncertainties, including those described in the safe harbor provision found in the investor materials and the company's SEC filings. We will frequently discuss non-GAAP financial measures, which are reconciled to GAAP measures in the appendix of the earnings presentation that can be found on the Investors section of the BWXT website. I would now like to turn the call over to Rex.

Thank you, Chase, and good evening to all of you. We closed out a record 2025 with another strong quarter of results that were ahead of our expectations. For the full year, revenue grew 18%, adjusted EBITDA grew 15%. Earnings per share grew 20% and free cash flow grew 16%, all exceeding the initial guidance we provided at the start of the year. These results reflect our ability to scale successfully in the context of robust demand in all of our nuclear end markets. We ended the year with backlog of $7.3 billion, up 50% year-over-year with meaningful growth in both segments. In government, we secured new pricing agreements for naval propulsion equipment and fuel and booked initial scopes on major awards to build out a U.S. defense uranium enrichment capability and to expand production of high-purity depleted uranium, and commercial backlog was boosted by CANDU life extensions, multiple SMR projects, and our first engineering contract on an AP1000. Beyond financial performance, 2025 was a year of exceptional strategic success. We completed the acquisitions of AOT and Kinectrics, enabling key wins such as the $1.6 billion high-purity depleted uranium contract and the owner's engineer role for Bulgaria's Kozloduy AP1000 project. Building on the significant capital we invested in our business earlier in the decade, we continue to invest in our facilities to support our customers and build capacity for future demand. In 2025, we held the grand opening for the BWST Innovation Campus, the home of our advanced nuclear and microreactor businesses and continued the expansion project at our large nuclear component plant in Cambridge. We recently completed construction of the Centrifuge manufacturing development facility and are designing a new high-purity depleted uranium manufacturing facility, both to support the NNSA. And earlier this month, we opened the BWXT Digital Center in Melbourne, Florida, which is our hub for digital transformation and AI initiatives across the organization. Turning to segment results and market outlook. Government Operations revenue was down 1% and adjusted EBITDA was down 5% in the quarter, slightly ahead of our expectations. In naval propulsion, with 2 new pricing agreements in place, our teams are focused on long lead materials, operational excellence, and delivery. During the quarter, we shipped 2 large steam generators for CVN 81, a Ford-class aircraft carrier from our Mountain Vernon, Indiana facility, highlighting our rhythm delivery for naval reactors. The Mountain Vernon facility sits on the Ohio River and has a 1,000 metric ton crane capacity suitable for lifting the largest nuclear reactor components onto barges directly from the site. Accordingly, we are considering expansion there to supply the U.S. commercial nuclear market. In Technical Services, a team led by BWXT, including Kinectrics, assumed the management and operations contract for the Canadian Nuclear Laboratories, our first international TSG project. We are tracking several other contract opportunities within the DOE complex as well as in a new domain. In fact, BWXT was an awardee on the Missile Defense Agency's $151 billion Shield contract, or Golden Dome, which positions us to compete for infrastructure support and engineering and manufacturing technology development on this strategically important national security program. In microreactor and advanced nuclear fuels, we delivered the first core of TRISO fuel for Project Pele to Idaho National Lab in November. We are also manufacturing TRISO for Antares, which aims to achieve reactor criticality by July 4 of this year, in line with the administration's nuclear executive orders. While others are planning to produce and manufacture advanced nuclear fuel, we are delivering today. Further, in the space domain, we continue to develop the technology required for nuclear thermal propulsion with NASA and are seeing specific opportunities around vision surface power. Lastly, in Special Materials, our team stood up the centrifuge manufacturing development facility in just 7 months for the defense fuels program with NNSA, reestablishing a domestic uranium enrichment capability for national security purposes. We are also preparing for the construction of a new facility in Jonesborough, Tennessee for high-purity depleted uranium production. These programs support our robust revenue growth outlook in 2026 and are highly strategic for the future of our special materials portfolio. Turning now to commercial operations. We reported impressive organic revenue growth of 31% in the quarter and total revenue growth of 95%, with strong growth in commercial nuclear power and medical and sales from Kinectrics. Backlog ended 2025 at $1.7 billion, up 85% compared to last year and up 16% sequentially, driven by equipment for CANDU refurbishments in Canada and other international markets, and design awards for SMR components to various reactor OEMs. This backlog growth, coupled with robust market demand supports our expectations for low double-digit organic revenue growth in the segment in 2026. BWXT Medical reached a milestone of slightly more than $100 million of annual revenue, up about 20% from last year with double-digit growth in diagnostic isotopes, a meaningful increase in actinium sales, and steady growth in TheraSphere. We expect similar growth in 2026 as these factors continue to drive the business. We continue to make measured investments in our medical portfolio as we work through the industrialization of our Tech 99 products, exploring new modalities for producing actinium-225 and around other therapeutic isotopes such as Lead-212. Turning now to commercial nuclear power. Demand is strong and our opportunity set is expanding. Commercial nuclear power book-to-bill was over 2 in the quarter, reflecting robust demand for CANDU aftermarket services and components in Canada, Europe, and Asia, a new long-term CANDU fuel contract, and design and component manufacturing contracts with several SMR technology providers, underscoring our role as a super merchant supplier for critical nuclear technologies. Additionally, in December, a consortium of BWXT Laurentis Energy Partners and its subsidiary, Canadian Nuclear Partners, was selected to provide owners engineer services for 2 proposed AP1000 nuclear reactors at the Kozloduy site in Bulgaria. This is BWXT's first meaningful AP1000 award, leveraging our large nuclear project experience and Kinectrics' depth in licensing, regulatory support, and engineering. We are actively bidding component packages for multiple AP1000 projects and expect additional awards this year. With that, I will now turn the call over to Mike.

Thanks, Rex, and good evening, everyone. I'll begin with total company financial highlights on Slide 4 of the earnings presentation. Fourth quarter revenue was $886 million, up 19% year-over-year as strong growth in commercial operations was partially offset by a modest and expected decline in government operations. Organic revenue was up 4%. Adjusted EBITDA was $148 million, up 13% year-over-year, attributable to robust double-digit growth in commercial operations and lower corporate expense, which were partially offset by lower government operations. Adjusted earnings per share were $1.08, up 17% due to strong operating performance and a higher contribution from nonoperating items of approximately $0.05. Our adjusted effective tax rate in the quarter was 19.5%, which was below our full year tax rate of 20.4% due to timing of R&D tax credits. In 2026, we expect our tax rate to be slightly higher at approximately 22% as growth in our commercial power and Kinectrics businesses will result in a greater percentage of international earnings. Fourth quarter free cash flow was $57 million, and full year free cash flow was $295 million, up 16% compared to last year, inclusive of 17% operating cash flow growth. Capital expenditures in 2025 were $185 million, 5.8% of sales. In 2026, we expect CapEx to be about 6% of sales as we continue to invest in the business to meet our commitments with our government customers and to support the growing demand in our commercial markets. During the quarter, we also completed a $1.25 billion convertible debt offering with a 0% coupon. In connection with the offering, we entered into a capped call transaction, which essentially increased the conversion price to over $396. Funds from the transaction were used to repay balances on our credit facility and term loan, which we in turn renegotiated with more favorable terms and increased capacity. This was a highly opportunistic transaction for BWXT. We reduced our cost of debt, lowered our interest expense, enhanced our financial flexibility, and increased our liquidity, which stood at $1.7 billion at the end of the year. Moving to the segment results on Slide 6. In Government Operations, fourth quarter revenue was down 1% as expected, with growth in special materials and contribution from AOT being offset by lower microreactor volumes and long lead material procurement for naval propulsion equipment, the latter of which was a benefit to our results in the first 3 quarters of the year. Adjusted EBITDA in the segment was $111 million, resulting in an adjusted EBITDA margin of 18.8%. Our quarterly adjusted EBITDA margin was slightly lower than the full year result of 20.4% due to mix as newer projects in this segment began to ramp. Turning to commercial operations. Revenue was up a robust 95%, driven by 31% organic growth with strong growth in both commercial power and medical and contribution from Kinectrics. This reflects both accelerating organic momentum and the strategic expansion of our commercial capabilities. Adjusted EBITDA in the segment was $44 million, up 87% from last year. Adjusted EBITDA margin was 14.9%, a notable improvement from last quarter. In 2026, we expect the Commercial Operations segment adjusted EBITDA margin to increase by roughly 100 basis points as higher revenue and more normalized mix is partially offset by continued growth investment as we scale the business for the future. Beyond 2026, we expect growth investment to be less of a margin headwind as continued investments are offset by additional revenue growth. Turning to our 2026 guidance on Slide 10 and 11 of the earnings presentation. From an operational standpoint, our guidance is largely in line with the preliminary outlook we provided in November. We expect revenue of approximately $3.75 billion, up high teens compared to 2025. In Government Operations, we expect approximately low to mid-teens growth with over half coming from the defense fuels and HPDU contracts. In commercial operations, we expect approximately 25% growth, driven by low double-digit growth in commercial power, high teens medical growth, and a full year of contribution from Kinectrics. For adjusted EBITDA, we are guiding $645 million to $660 million, up low to mid-teens compared to 2025. In Government Operations, we expect margin to be slightly lower given the significant revenue contribution from new programs, which begins at a lower initial profit recognition and expands over time as execution milestones are met and contract risk is reduced. In commercial operations, we expect margin to trend back toward historical levels, as I previously discussed. Regarding the cadence of operating earnings, we anticipate our results will be slightly more back half weighted than usual, with about 55% of full year EBITDA anticipated in the second half. This will largely be reflected in first quarter results with a return to more normal seasonality in the second quarter. In the first quarter, while we expect solid year-over-year organic revenue growth, EBITDA is likely to be flat to slightly higher in both segments due to seasonality, short-term impacts of mix, and ramping of new programs. In Government operations, this will likely translate to first quarter EBITDA being roughly flat year-over-year, yielding a margin that is slightly below the full year guidance rate. And in Commercial Operations, margins are expected to start the year well below our full year guidance before improving sequentially each quarter throughout the remainder of the year, reflecting program timing and mix. These assumptions lead to non-GAAP earnings per share guidance of $4.55 to $4.70, up mid- to high teens, driven largely by growth in both segments. With a modest contribution from nonoperational items as lower interest expense is partially offset by a slightly higher tax rate and share count and lower pension and other income. From a quarterly perspective, while we anticipate earnings per share to follow a similar pattern to our operating earnings with first quarter EPS relatively flat compared to last year, we are highly confident in delivering our full year earnings growth outlook. Finally, we expect free cash flow of $305 million to $320 million, inclusive of low to mid-teens operating cash flow growth, in line with our adjusted EBITDA growth outlook. Importantly, this level of cash generation supports both continued reinvestment and long-term shareholder value creation. Overall, we see 2026 as another year of meaningful operational growth for BWXT. We've strengthened our balance sheet, expanded our commercial platform, and positioned the company for continued margin improvement and cash generation. Our focus remains on disciplined execution, prudent investment, and long-term shareholder value creation. With that, I will turn it back to Rex for closing remarks.

Thanks, Mike. 2025 was a monumental year for BWXT. We set at the intersection of the national security and commercial nuclear power markets in a market-leading position with unmatched scale, experiential qualifications, and regulatory credentials. It's an exciting place to be, and the outlook is bright. This position demands that we execute to drive quality earnings growth and shareholder value. Our priorities are executing against our robust backlog, process optimization, new technology adoption throughout the organization, and on disciplined growth investments, both organic and inorganic. And with that, we look forward to taking your questions.

Our first question comes from Scott Deuschle with Deutsche Bank.

Mike, should we expect government operations margins to trough in 2026 on these mix headwinds? Or could there be incremental mix pressure in 2027 that we should be mindful of?

Thanks, Scott. I don’t see any significant additional pressure as we look towards 2027. As I mentioned in the last call and in previous calls, we are very optimistic about our current pricing agreement. Our core naval propulsion business is performing quite well. Efficiency and utilization are improving at our largest and best sites. Therefore, we see many opportunities as we look to the future. What you're observing in 2026 is partly due to some mix pressure. As we discussed, half of the growth is driven by new programs where we're making infrastructure investments, leading to a slight decline, but we anticipate a recovery in 2027.

Okay. And then Rex, can you talk about how BWXT is using AI internally today? And then are there any business functions where you're particularly excited about the potential impact of AI over the medium term, whether that be from cost synergy opportunity or something else?

Yes, thanks for the question, Scott. There are two stories regarding AI at BWXT—an external and an internal one. The external perspective is that there is a belief nuclear power will support the future data centers, which seems reasonable but is not part of our current business. Internally, our journey with AI unfolds in three phases. In Phase 1, we employed machine learning to enhance certain internal functions, especially in manufacturing. For instance, we installed hyperspectral sensors to monitor complex processes, using machine learning to detect when specifications were off, which saved us a lot of costly rework. In Phase 2, with the advent of large language models, we're finding ways to utilize these tools to boost operational efficiencies. Currently, we're focused on democratizing access to resources like Databricks and ChatGPT. Phase 3 will involve factory automation, as we aim to transform our traditional plants into fully digitized environments. We expect fully digitized quality records, automated inspections, and digital twin models of every component we produce. We are eager to enter this phase.

That's really interesting. For Phase 3, do you see any limitations from the security clearances required, things like that, that would prohibit your ability to deploy those types of systems, particularly for government operations? Or do you think you have the ability to use things like digital twins and some of those classified areas as well?

I'd say not much, Scott. I mean, certainly, we have to be concerned about using WiFi and Bluetooth kind of systems in a classified manufacturing environment. So there are things that we will have to work around, but I think we will work around them with support from our customers.

Our next question comes from the line of Matt Akers with BNP Paribas.

I wanted to ask, I think some of the commentary from the shipbuilder this quarter was relatively positive in terms of just some of the supply chain bottlenecks they had seen maybe starting to get a little better. Just curious if you're seeing any of that flow through to you in terms of maybe more pulling demand forward or anything like that or if you're seeing anything along those lines?

Yes, we've received some encouraging news as well. From the beginning, we've believed that instead of slowing down the supply chain, we need to address the bottleneck. It appears we're witnessing progress at the shipyards. A few quarters ago, we announced that Admiral McCoy, who oversees our government operations, was assigned to the Department of Defense to assist the Navy specifically in improving throughput at the shipyards. This is essential for the nation and the Navy. We are maintaining our delivery schedules and are very pleased to see the shipyards improving their delivery rates.

Yes. And I guess as a follow-up, just I want to ask on capital deployment and sort of what your priorities are now? And how big could M&A be as a part of that after AOT and Kinectrics?

Yes. We're really excited about the steps we've taken to strengthen our balance sheet. The convertible that we completed in the fourth quarter provided us with significant flexibility. We feel well-positioned for potential mergers and acquisitions as we approach 2026. As we evaluate various targets, our focus remains on enhancing our core business and increasing our overall capacity to meet future customer needs. These are key areas we will prioritize. We consistently review a number of assets, and we believe that M&A will continue to play a major role in our capital deployment strategy.

Next question comes from the line of Jeffrey Campbell with Seaport Research Partners.

Congratulations on the quarter. I'll just stick with one. Rex, you mentioned your U.S. commercial facility might be built at Mount Vernon. I just wonder, are there any particular challenges in citing a commercial facility adjacent to one that's dedicated to defense purposes?

Yes. Thanks, Jeff, for the question. Good to hear you. No, I think it's the opposite, right? There's some synergies between our government business there and the would-be commercial facility there. For example, you share radiography facilities. I did mention that we have 1,000 metric ton crane capacity to Stevedore components right on to the Ohio River there. So we would certainly jointly share those assets and be able to amortize the cost over those assets together. So I think there are certain advantages. We would segregate those businesses for certain reasons financially. But yes, no, very good reasons and very good synergies for putting those 2 things on the same side.

Next question comes from the line of Robert Labick with CJS Securities.

This is Will on for Bob. As a U.S. company with obviously strong operations in Canada, what is the latest impact, if any, on the tariff situation? And in general, does the seemingly souring of U.S.-Canada relations have an impact on BWX?

Knock on wood, it hasn't so far because we're still operating under the framework of the USMCA trade agreement between the U.S., Mexico, and Canada that was established during the last Trump administration. There are no tariffs within that framework on medical products or nuclear components, which is fortunate. The recent announcement about 10% and then 15% tariffs does not impact the USMCA agreement. We are still functioning within that framework, which is currently being renegotiated. We'll see how things unfold, but I'm hopeful that trade relations between the U.S. and Canada and Mexico remain stable and do not adversely affect our business.

And one more. As we look over the next several years, we have DUECE and HPDU incremental growth this year in naval growth coming in 2027. Beyond that, can you discuss the timing of Canadian newbuilds, micro reactors and other long-term layers to your growth map?

Yes, there are various time frames for all of that. We mentioned in the script that we have secured business with the AP1000 in Europe through the Kozloduy owner's engineer contract. Currently, we have SMR contracts in hand, and we are manufacturing the reactor pressure vessel for GE, along with several other components for different small modular reactor suppliers. I expect additional orders for the X300 this year, as well as for the AP1000, though those are not finalized yet. However, we are beginning to see the commercial side of our business develop positively, with aggressive organic growth forecasted, most of which is already secured. You can expect small modular reactors to start ramping up now. We also have a solid program for micro reactors, including the Janus program, which is a successor to Pele, and we are in a strong competitive position there, hoping for positive results. This growth should continue over the next few years. In the medical sector, we have been experiencing about 20% compounded growth, indicating strong demand across all our markets, and we anticipate this demand to increase at various intervals in the coming years.

Next question comes from the line of Jeff Grampp with Northland Securities.

Rex, to go back on the AP1000 comments that you had in your prepared remarks, could you give us a sense for BWXT's revenue content per project you're competing on or any generalities there just to kind of get a sense of materiality for some of these projects for the company?

Yes. Historically, for large reactors, particularly for a CANDU new build, the costs are estimated between $500 million and $1 billion, especially with the addition from Kinectrics potentially pushing towards the higher end. For an AP1000, depending on the components we secure, such as steam generators, we're looking at costs in the hundreds of millions, possibly on the lower side. However, this is somewhat speculative since we have not yet determined the content we will acquire. We're bidding on various projects, and we will need to wait and see the results.

Understood. That's helpful. And for my follow-up on some of the recent government contracts you guys alluded to having some lower margins at the front end. I'm just wondering, structurally, as these ramp over time, did we expect just a kind of linear progression in margin over time as these mature? Or is it kind of more of a stair-step function as milestones are reached? Just kind of wondering to level set expectations as those contracts kind of roll through the results here.

Yes. So I would say that the contracts are structured slightly differently. We are in the first phase of negotiating under the Defense fuels program. And then for HPDU, that's a longer kind of upfront negotiated program. I think in both cases, what we would typically do along with our processes is kind of evaluate the overall margin performance. And usually, as we meet various milestones and reduce risk under those programs is when we would incrementally adjust margin. So those programs, we feel like we have a great opportunity to perform well, but it's a little early days. And we talked a little bit about how we're doing some infrastructure build-out. And so we have some lower margin components associated with those initial costs. But we do expect that as we start to get into full ramp of processing of the materials and production that ultimately we'll have an opportunity to outperform.

Next question comes from the line of Jed Dorsheimer with William Blair.

Congrats on the quarter. Rex, I guess, first question, Pentagon just released $29.2 billion spending added a new sub. I'm just wondering how that compares to your expectations? Was that ahead, in line, or behind your expectations? Any surprises as you look through the budget allocation, then I have a follow-up.

Yes, sure, Jed. The appropriation of funding doesn't really influence our business. Our programs are funded through different lines, so it was neutral for us. We are still on the shipbuilding schedule with 2 Virginias a year, 1 Columbia a year, and Ford is roughly on 5-year intervals. Therefore, we were indifferent to that news.

Got it. For both you and Mike, in terms of capital allocation in the commercial sector, you're engaged with CANDUs in Canada and internationally. You've just started working with AP1000 and are involved with various SMRs, including GE, Rolls-Royce, and several new players. I'm interested in how you're perceiving the business with this level of insight. Are you aiming for steady growth in different regions that you can support? Or do you notice any specific technology progressing more rapidly? How are you considering adding resources to meet the needs of those markets?

Yes. When we assess our capacity in Cambridge, we can foresee a potential capacity constraint a couple of years down the line. Therefore, we are actively seeking assets, particularly in the U.S., where we have promising acquisition targets. I specifically mentioned the possibility of constructing a plant at Mount Vernon. We prioritize U.S. capacity as our immediate need. Additionally, there is an opportunity in Europe, where there is interest in small modular reactors. Our decision to invest there will depend on localization requirements. However, we do need capacity soon because we anticipate growing demand in the future, starting with the U.S.

In addition to expanding our footprint, we are also investing in technologies to enhance throughput within the factory. Our focus is not solely on increasing our footprint; we are also working to improve operational excellence, which supports our workforce. This is a key consideration as we plan our capital expenditures and determine where to invest in new machinery and technology.

Next question comes from the line of Sam Straker with Truist Securities.

On for Mike. To start, I'd like to build on the discussion about small modular reactors and microreactors. Could you provide more details on your progress with the NASA and military microreactor programs? Additionally, with the growth you're experiencing in small modular reactors, how are you assessing the TRISO fuel market in terms of its current status and potential opportunities going forward?

Yes, sure. A few questions embedded there. On microreactors, we're in the middle of Pele. We deliver that to Idaho National Laboratory next year. We announced the delivery of the fuel for that reactor at the end of last year. So we're proceeding at pace and that reactor will start undergoing testing in '27, '28 time frame. Think of that as a precursor to the Janus program, which is in procurement right now. They're soliciting offers from various technology providers, including us. We see that one as a super interesting opportunity. On the NASA side, we're still doing some work on nuclear thermal propulsion, although it's not within the context of the DRACO program, we still have some level of effort with NASA. I think the bigger opportunity in the space market is around vision surface power. It looks like NASA intends to procure a vision reactor for a lunar base. And certainly, we have got the right credentials to compete for that. In terms of TRISO fuel, I think there are 2 interesting things going on here. One is demand on the government side that's related to programs like Janus, where the microreactor technologies generally are calling for TRISO fuel or designed around TRISO fuel. But I think there's also an interesting commercial play there, and we're certainly evaluating that, either sub-grid or below grid capacity power output, and certainly remote applications for high-density power. So very interesting opportunity around TRISO, and we're looking pretty hard at whether we make an investment there, a larger scale investment.

Our next question comes from Jan Engelbrecht with Baird.

Congratulations on a strong quarter. I would like to revisit the AP1000 and the CANDU market. Regarding the AP1000 owner's engineer contract you secured, how do you view your bid for component work? Do you think your proposal is more competitive for North American projects compared to those in Europe? We know that for the AP1000 project in Poland, the steam generator supplier has already been announced, and I understand you did not bid for that. As new AP1000 contracts or projects come up, how should we assess your chances based on the continent they're on?

I don't think we're thinking of it that way, JF. The owner's engineer contract with Bulgaria was a unique opportunity for us to team up with a component of Ontario Power Generation. So we have their expertise, and we have our deep engineering capability, which is augmented by Kinectrics. So that was a very particular opportunity there. I think we're sort of geographic agnostic when it comes to component supply. We hope to be able to compete reasonably well in all these markets. But I would also say that as the market really starts to warm up and we start to see real capacity constraint, I think we'll be more competitive and we'll have more pricing power. So I'm optimistic about all of it.

Next question comes from the line of Jan Engelbrecht with CJS Securities.

A lot of shipbuilding reconciliation funding for shipbuilding. And then you just got the news from Australia, they're going to invest, I think, close to $3 billion in their own shipyard. And in terms of second source opportunities, can you just sort of how are you thinking about long term, all this new funding that's going on? It seems that there's really a lot of attention being placed into sort of reducing the bottlenecks. But how does that set you up beyond 2030 for long-term growth in that segment?

Yes, maybe a little hard to say. I mean, right now, we're sort of building our guidance and our internal forecast around the shipbuilding plan. We do have some business on the AUKUS side related to production capacity that's giving us a bit of growth here in 2026. And of course, there's the sort of the wildcard of South Korea out there, we would hope to be involved in, say, fuel manufacturing at least, if not reactor cores. So there are interesting possibilities out there. I would say that if you think about reconciliation and just a broader defense budget, I think you can see more opportunities around micro reactors, fuel, and other such things that are sort of not prescriptively mapped into the shipbuilding schedule. So a bit of a TBD for us, but certainly exciting on the national security side of our business.

Next question comes from the line of Andre Madrid with BTIG.

This is Ned Morgan on for Andre. I just want to ask and get the latest on the Canadian Competition Bureau's investigation into the Kinectrics acquisition.

It's been pretty quiet on our front. No news on that one.

All right. And then a follow-up. Is there any update on when we could see approval of Tech 99?

Yes, there's not much new to report. Over the last few quarters, I've mentioned that we are in the final stages of addressing some product quality and filtration concentration issues. We have a new leader in our medical business, Jason Van Wart, who is demonstrating strong leadership and has promising new ideas for our commercial product strategy, including Tech 99. It's still early in that area, so we'll see how it develops. Overall, I'm feeling optimistic about that business. We have not submitted anything to the FDA yet, and I don't have complete clarity on that due to the product quality challenges we are currently addressing. I should note that we did not factor in Tech 99 revenue in our 2026 guidance, so it is not included in our current numbers. If it materializes, it would represent an upside for us.

There are no further questions at this time. I would like to turn the call back over to Chase Jacobson for closing remarks.

Yes. Thanks, everyone, for joining us today. We look forward to speaking with many of you and seeing you at upcoming investor events or on calls. If you have any questions, please feel free to reach out to me at investors at bwxt.com. Have a great night. Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.