BWXT 10-K
BWX Technologies, Inc. (BWXT)
10-K
2026-02-23
For: 2025-12-31
View Original
Added on
April 07, 2026
UNITED STATES | |||||||||||
| SECURITIES AND EXCHANGE COMMISSION | |||||||||||
| Washington, D.C. 20549 | |||||||||||
FORM 10-K
(Mark One) | |||||||||||
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
For the fiscal year ended | |||||||||||
OR | |||||||||||
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||
For the transition period from to . | |||||||||||
Commission File Number 001-34658
| (Exact name of registrant as specified in its charter) | |||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
Registrant's Telephone Number, Including Area Code: (980 ) 365-4300
Securities Registered Pursuant to Section 12(b) of the Act: | |||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
Securities registered pursuant to Section 12(g) of the Act: None | |||||||||||
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
| Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant's common stock held by nonaffiliates of the registrant on the last business day of the registrant's most recently completed second fiscal quarter (based on the closing sales price on the New York Stock Exchange on June 30, 2025) was approximately $13.2 billion.
The number of shares of the registrant's common stock outstanding at February 19, 2026 was 91,445,088 .
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for the 2026 Annual Meeting of Stockholders to be held on April 30, 2026 are incorporated by reference into Part III of this Form 10-K.
BWX TECHNOLOGIES, INC.
INDEX – FORM 10-K
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| Years Ended December 31, 2025, 2024 and 2023 | ||||||||
| Years Ended December 31, 2025, 2024 and 2023 | ||||||||
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| December 31, 2025 and 2024 | ||||||||
| Years Ended December 31, 2025, 2024 and 2023 | ||||||||
| Years Ended December 31, 2025, 2024 and 2023 | ||||||||
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Statements we make in this Annual Report on Form 10-K ("Report"), which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to various risks, uncertainties and assumptions, including those to which we refer under the heading "Cautionary Statement Concerning Forward-Looking Statements" in Item 1 and throughout Item 1A of this Report. In this Report, unless the context otherwise indicates, "we," "us" and "our" mean BWX Technologies, Inc. ("BWXT" or the "Company") and its consolidated subsidiaries.
PART I
Item 1. BUSINESS
General
BWX Technologies, Inc. is a specialty manufacturer of nuclear components, a developer of nuclear technologies and a service provider with an operating history of more than 100 years. Our core businesses focus on the design, engineering and manufacture of precision naval nuclear components, nuclear reactors and nuclear fuel for the U.S. Government. We also provide special nuclear materials processing, environmental site restoration services, products and services to customers in the nuclear power industry, critical medical radioisotopes and radiopharmaceuticals and other advanced nuclear technologies. While we provide a wide range of products and services, our business segments are heavily focused on major projects. At any given time, a relatively small number of projects can represent a significant part of our operations.
Business Segments
We operate in two reportable segments: Government Operations and Commercial Operations. For financial information regarding each of our segments and financial information regarding geographic areas, see Note 3 and Note 15 to our consolidated financial statements included in this Report. For further details regarding each segment's facilities, see Item 2 of this Report. In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our revenues. We are currently exploring growth strategies across our segments through strategic investments and acquisitions to expand and complement our existing businesses. We would expect to fund these opportunities with cash generated from operations or by raising additional capital through debt, equity or some combination thereof.
Government Operations
Through this segment, we engineer, design and manufacture precision naval nuclear components, reactors and nuclear fuel for the U.S. Department of Energy ("DOE")/National Nuclear Security Administration's ("NNSA") Naval Nuclear Propulsion Program and we have over 100 years of experience in supplying components for defense applications. In addition, we supply proprietary and sole-source valves, manifolds and fittings to global naval and commercial shipping customers.
Our Government Operations segment specializes in the design and manufacture of close-tolerance and high-quality equipment for nuclear applications. In addition, we design advanced reactors and are a leading manufacturer of critical nuclear components, fuels and assemblies for government and limited other uses. We have supplied nuclear components for DOE programs since the 1950s and are the largest domestic supplier of research reactor fuel elements for colleges, universities and national laboratories. We also downblend Cold War-era government stockpiles of high-enriched uranium, develop capabilities related to the manufacture of high-purity depleted uranium and manufacture other advanced materials and products for commercial, military and space applications.
We work closely with the DOE-supported nuclear non-proliferation program. Currently, this program is assisting in the development of a high-density, low-enriched uranium fuel required for high-enriched uranium test reactor conversions. We have also been a leader in the receipt, storage, characterization, dissolution, recovery and purification of a variety of uranium-bearing materials. All phases of uranium downblending and uranium recovery are performed at our Lynchburg, Virginia and Erwin, Tennessee sites.
The demand for nuclear components by the U.S. Government determines a substantial portion of this segment's backlog. We expect that orders for nuclear components will continue to be a significant part of backlog for the foreseeable future. In March 2024, the U.S. Navy issued its 30-year shipbuilding plan containing three alternative procurement profiles based upon varied funding assumptions. All three indicate growth in the total number of ships and a sustained, or increased, procurement profile for nuclear-powered submarines and aircraft carriers. We plan to make additional capital expenditures and investments in personnel to meet the current demand requirements, and we expect to continue making such expenditures and investments in the future.
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This segment also provides various services to the U.S. and Canadian governments by managing and operating high-consequence operations at U.S. nuclear weapons sites, national laboratories and manufacturing complexes. The revenues and equity in income of investees under these types of contracts are largely a function of spending by the U.S. Government and the performance scores we and our consortium partners earn in managing and operating these sites. With our specialized capabilities of full life-cycle management of special materials, facilities and technologies, we believe that we are well-positioned to continue participating in the ongoing cleanup, operation and management of critical government-owned nuclear sites, laboratories and manufacturing complexes maintained by the DOE, NNSA and other federal agencies.
The Government Operations segment is also a leader in the development of advanced nuclear reactors for a variety of power and propulsion applications in the space and terrestrial domains. U.S. Government customers for these applications include NASA, the U.S. Department of War ("DoW"), also known as the Department of Defense, and the DOE. We offer complete advanced nuclear fuel and reactor design and engineering, licensing and manufacturing services for these programs.
Commercial Operations
Through this segment, we design and manufacture commercial nuclear steam generators, heat exchangers, pressure vessels, reactor components and other auxiliary equipment, including containers for the storage of spent nuclear fuel and other high-level nuclear waste. We supply large, heavy components to the worldwide nuclear industry and are the only commercial heavy nuclear component manufacturer in North America. This segment is also a leading supplier of nuclear fuel, fuel handling systems, reactor controls, specialty tooling, nuclear-grade materials and precisely machined components, and related engineering and maintenance services for nuclear power plans. This segment also provides a variety of engineering and in-plant services and is a significant supplier to nuclear power utilities undergoing major refurbishment and plant life extension projects. Our in-depth knowledge comes from over 50 years of experience in the design, manufacturing, commissioning and service of nuclear power generation equipment.
Our Commercial Operations segment specializes in performing full-scope, prototype design work coupled with manufacturing integration. This segment's capabilities include:
•steam generation and separation equipment design and development;
•thermal-hydraulic design of reactor plant components;
•in-plant inspection, maintenance and modification services;
•nuclear component modification and replacement;
•commercial nuclear fuel design and manufacturing;
•nuclear fuel handling system design, manufacturing, delivery, installation and commissioning;
•containers for the storage of spent nuclear fuel and other high-level waste;
•lifecycle support and management services for the global nuclear power industry, transmission and distribution markets;
•structural and thermal-hydraulic design and vibration analysis for heat exchangers;
•structural component design for precision manufacturing;
•materials expertise in high-strength, low-alloy steels and nickel-based materials;
•material procurement of tubing, forgings and weld wire; and
•metallographic and chemical analysis.
This segment also manufactures and supplies products for diagnostic imaging and radiotherapeutic treatments and is a partner for contract development and manufacturing services for life science and pharmaceutical companies. Among its offerings are the manufacture of medical radioisotopes, radiopharmaceuticals and medical devices, as well as partnerships with life science and pharmaceutical companies developing new drugs.
Our Commercial Operations segment's overall activity primarily depends on the demand and competitiveness of nuclear energy and the demand for critical medical radioisotopes and radiopharmaceuticals. A significant portion of our Commercial Operations segment's operations depends on the timing of maintenance outages and the cyclical nature of capital expenditures and major refurbishments for nuclear utility customers, principally in the Canadian market, which could cause variability in our financial results.
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Acquisitions
Aerojet Ordnance Tennessee, Inc.
On January 3, 2025, we completed the acquisition of Aerojet Ordnance Tennessee, Inc. ("A.O.T"), a subsidiary of L3Harris Technologies, Inc. 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. is reported as part of our Government Operations segment.
Kinectrics, Inc.
On May 20, 2025, we completed the acquisition Kinectrics Holdings, Inc., the parent company of Kinectrics, Inc. ("Kinectrics"). 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 which will enable us to expand our portfolio of products and services in the global nuclear and nuclear medicine markets. Kinectrics is reported as part of our Commercial Operations segment.
See Note 2 to our consolidated financial statements included in this Report for additional information about our recent acquisition activity.
Contracts
We execute our contracts through a variety of methods, including fixed-price incentive fee, cost-plus, cost-reimbursable, firm fixed-price or some combination of these methods. We generally recognize our contract revenues and related costs on an over time basis. Accordingly, we review contract price and cost estimates regularly as the work progresses and reflect adjustments in profit proportionate to the percentage of completion in the period when we revise those estimates. To the extent that these adjustments result in a reduction or an elimination of previously reported profits with respect to a project, we would recognize a charge against current earnings, which could be material.
We have contracts that extend beyond one year. Most of our long-term contracts have provisions for progress payments. We attempt to cover anticipated increases in labor, material and service costs of our long-term contracts either through an estimate of such changes, which is reflected in the original price, or through risk-sharing mechanisms, such as escalation or price adjustments for items including labor and material prices.
In the event of a contract deferral or cancellation, we generally would be entitled to recover costs incurred, settlement expenses and profit on work completed prior to deferral or cancellation. Significant or numerous contract deferrals or cancellations could adversely affect our business, financial condition, results of operations and cash flows.
Government Operations
The majority of the revenue generated by this segment is from long-term contracts with the DOE/NNSA's Naval Nuclear Propulsion Program. Unless otherwise specified in a contract, allowable and allocable costs are billed to contracts with the U.S. Government in accordance with the Federal Acquisition Regulation (the "FAR") and the related U.S. Government Cost Accounting Standards ("CAS"). Examples of costs that may be incurred by us and not billable to the U.S. Government in accordance with the requirements of the FAR and CAS include, but are not limited to, unallowable employee compensation and benefit costs, lobbying costs, interest, certain legal costs and charitable donations.
Most of our contracts in this segment are fixed-price incentive fee contracts that provide for reimbursement of allowable costs incurred plus a fee and generally require that we use our best efforts to accomplish the scope of the work within some specified time and stated dollar limitation. Fees can be established in terms of dollar value or percentage of costs. Award and incentive fees are determined and earned based on customer evaluation of our performance against negotiated criteria, primarily related to cost, and are intended to provide motivation for excellence in contract performance. Incentive fees that are based on cost provide for an initially negotiated fee to be adjusted later, typically using a formula to measure performance against the associated criteria, based on the relationship of total allowable costs to total target costs. Award and incentive fees represent variable consideration that we include in revenue when there is sufficient evidence to determine that the variable consideration is not constrained.
Certain of our U.S. Government contracts span one or more base years and multiple option years. The U.S. Government generally has the right not to exercise option periods and may not exercise an option period for various reasons including, but not limited to, annual funding determinations. In addition, contracts between the U.S. Government and its prime contractors usually contain standard provisions for termination at the convenience of the U.S. Government. As a U.S. Government
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contractor, we are subject to federal regulations under which our right to receive future awards of new federal contracts would be unilaterally suspended or barred if we were convicted of a crime or indicted based on allegations of a violation of specific federal statutes. In addition, some of our contracts with the U.S. Government require us to provide advance notice in connection with any contemplated sale or shut down of the relevant facility. In each of these situations, the U.S. Government has an exclusive right to negotiate a mutually acceptable purchase of the facility.
Our Government Operations segment also enters into contracts that include the management and operation of nuclear production facilities, environmental management sites and the management of spent nuclear fuel and transuranic waste for the U.S. Government, primarily the DOE. These activities are primarily accomplished through our participation in joint ventures with other contractors as further discussed under the caption "Joint Ventures" below. The contracts for the management and operation of U.S. Government facilities are awarded through a complex and protracted procurement process. These contracts are generally structured as five-year contracts with options for five to ten additional years, which are exercisable by the customer, or include provisions whereby the contract durations can be extended as a result of the achievement of certain performance metrics. These are generally cost-reimbursable contracts that include an award fee that is primarily based on annual performance, with periodic provisional fee payments and annual true-up payments. Depending on the type of contract, the contractor may be required to supply working capital, which is reimbursed by the U.S. Government through regular invoicing.
This segment also serves customers of our advanced technology platforms primarily through contracts that are awarded following a competitive bid process, primarily in the early design and development phases of the underlying program. Most of our contracts in this area are cost-plus which reduces our overall risk as the underlying projects increase in scale.
Commercial Operations
Contracts in this segment are usually awarded through a competitive bid process. Factors that customers may consider include price, plant or equipment availability, technical capabilities of equipment and personnel, efficiency, safety record and reputation. Certain of these contracts are fixed-price contracts in which the specified scope of work is agreed to for a pre-determined price that is generally not subject to adjustment, regardless of costs incurred by the contractor, unless changes in scope are authorized by the customer. Fixed-price contracts entail more risk to us because they require us to predetermine both the quantities of work to be performed and the costs associated with executing the work. Remaining contracts are primarily time-and-materials contracts, under which the customer pays a fixed hourly rate for direct labor and generally reimburses us for the cost of materials. Our profit may vary under time-and-materials contracts if actual labor-hour rates vary significantly from the negotiated rates. Additionally, because time-and-materials contracts can provide little or no fee for managing material costs, the content mix can have an impact on profitability.
Our arrangements with customers may require us to provide letters of credit, bid and performance bonds or guarantees to secure bids or performance under contracts, which may involve significant amounts for contract security.
Backlog
Backlog represents the dollar amount of revenue we expect to recognize in the future from contracts awarded and in progress. Not all of our expected revenue from a contract award is recorded in backlog for a variety of reasons, including that some projects are awarded and completed within the same reporting period.
Our backlog is equal to our remaining performance obligations under contracts that meet the criteria in Financial Accounting Standards Board ("FASB") Topic Revenue from Contracts with Customers, as discussed in Note 3 to our consolidated financial statements included in this Report. It is possible that our methodology for determining backlog may not be comparable to methods used by other companies.
We are subject to the budgetary and appropriations cycle of the U.S. Government as it relates to our Government Operations segment. Backlog may not be indicative of future operating results, and projects in our backlog may be cancelled, modified or otherwise altered by customers.
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Our backlog at December 31, 2025 and 2024 was as follows:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| (In approximate millions) | ||||||||||||||||||||||||||
| Government Operations | $ | 5,541 | 76 | % | $ | 3,913 | 81 | % | ||||||||||||||||||
| Commercial Operations | 1,720 | 24 | % | 930 | 19 | % | ||||||||||||||||||||
| Total Backlog | $ | 7,261 | 100 | % | $ | 4,843 | 100 | % | ||||||||||||||||||
We do not include the value of our unconsolidated joint venture contracts in backlog. See Note 4 to our consolidated financial statements included in this Report for financial information on our equity method investments.
At December 31, 2025, our ending backlog was $7,260.7 million, which included $2,151.3 million of unfunded backlog related to U.S. Government contracts. We expect to recognize approximately 40% of the revenue associated with our backlog by the end of 2026, with the remainder to be recognized thereafter.
Major new awards from the U.S. Government are typically received following Congressional approval of appropriations for the U.S. Government's next fiscal year, which starts October 1, and may not be awarded to us before the end of the calendar year. Due to the fact that most contracts awarded by the U.S. Government are subject to these annual funding approvals, the total values of the underlying programs are significantly larger.
The value of unexercised options excluded from backlog as of December 31, 2025 was approximately $2,800 million. We expect $1,400 million to be awarded in 2026, $900 million to be awarded in 2030 and $500 million to be awarded in 2035, subject to Congressional appropriations.
Competition
The competitive environments in which each segment operates are described below.
Government Operations
We have specialized technical capabilities that have allowed us to be a valued supplier of nuclear components and fuel for the U.S. Government's naval nuclear fleet since the 1950s. Because of the technical and regulatory standards required to meet U.S. Government contracting requirements for nuclear components and fuel and the barriers to entry present in this type of environment, competition is limited. The primary bases of limited competition are price, high capital investment, technical capabilities, high regulatory licensing costs and quality of products and services. In addition, significant portions of the designs, processing and final product are classified by the U.S. Government, requiring applicable personnel to obtain and maintain U.S. Government security clearances.
This segment also engages in the management and operation of U.S. Government facilities and the delivery of environmental remediation services (decontamination and decommissioning) associated with U.S. Government-owned nuclear facilities. Many of our government contracts in this area are bid as a joint venture with one or more companies, in which we have a majority or a minority position. The performance of our joint venture partners can impact our reputation and our future competitive position with respect to that particular project and customer. Our primary competitors in the delivery of goods and services to the U.S. Government and the operation of U.S. Government facilities include, but are not limited to, Bechtel National, Inc., Amentum Environment & Energy, Inc., Fluor Corporation, Northrop Grumman Corporation, Huntington Ingalls Industries, Inc., Honeywell International, Inc., Leidos, Inc., Westinghouse Electric Corporation and AtkinsRéalis. The primary bases of competition for this segment are experience, past performance, availability of key personnel and technical capabilities.
Commercial Operations
Our Commercial Operations segment supplies heavy nuclear components, specialized engineering and maintenance services, nuclear fuel, fuel handling systems and tooling delivery systems for nuclear reactors. This segment competes with a number of companies specializing in nuclear capabilities including, but not limited to, Framatome, Cameco Corporation, Doosan Heavy Industries & Construction Co., Ltd., AECON Group Inc., Westinghouse Electric Corporation and AtkinsRéalis. The primary bases of competition for this segment are price, technical capabilities, quality, timeliness of performance, breadth of products and services and willingness to accept project risks.
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This segment also manufactures medical radioisotopes, radiopharmaceuticals and medical devices, and partners with life science and pharmaceutical companies developing new drugs. This segment competes with a number of nuclear medicine companies which include, but are not limited to, Curium Pharma, SHINE Technologies. and Jubilant DraxImage Inc. The primary bases of competition in this area are quality, distribution capabilities, price and reliability.
Joint Ventures
We share in the ownership of a variety of entities with third parties, primarily through corporations, limited liability companies and partnerships, which we refer to as "joint ventures." The majority of our joint venture arrangements are within our Government Operations segment and are primarily used to manage and operate nuclear facilities and associated plant infrastructure, constructs large capital facilities, provides safeguards and security for inventory and assets, supports and conducts research and development for advanced energy technology and manages environmental programs for the DOE, the NNSA and NASA. We generally account for our investments in joint ventures under the equity method of accounting. Certain of our unconsolidated joint ventures are described below.
Government Operations
•Los Alamos Legacy Cleanup Contract. Newport News Nuclear BWXT – Los Alamos, LLC, a limited liability company formed by Stoller Newport News Nuclear, Inc., a subsidiary of Huntington Ingalls Industries, Inc.'s Technical Solutions division, and BWXT Technical Services Group, Inc. ("BWXT TSG"), was awarded a contract to perform environmental monitoring and remediation, waste management and disposition, and decontamination and decommissioning at the Los Alamos National Laboratory site and surrounding private and government-owned lands.
•Lawrence Livermore National Laboratory. Lawrence Livermore National Security, LLC, a limited liability company formed by the University of California, Bechtel National, Inc., Amentum Environment & Energy, Inc. and BWXT Government Group, Inc., manages and operates Lawrence Livermore National Laboratory located in Livermore, California. The laboratory serves as a national resource in science and engineering, focused on national security, energy, the environment and bioscience, with special responsibility for nuclear devices.
•Savannah River Integrated Mission Completion Contract. Savannah River Mission Completion, LLC, a limited liability company formed by BWXT TSG, Amentum Environment & Energy, Inc. and Fluor Federal Services, Inc. was awarded a contract to receive, store, treat and dispose of radioactive liquid waste for the DOE at the Savannah River Site located in Aiken, South Carolina.
•Portsmouth Gaseous Diffusion Plant D&D. Fluor-BWXT Portsmouth LLC is a limited liability company formed by Fluor Federal Services, Inc. and BWXT TSG to provide nuclear operations, decontamination and decommissioning services at the Portsmouth Gaseous Diffusion Plant in Portsmouth, Ohio. A follow-on contract was awarded by the DOE to another contractor and transition was completed in September 2025.
•West Valley Demonstration Project Phase I Decommissioning and Facility Disposition. CH2M Hill-BWXT West Valley, LLC is a limited liability company formed by Amentum Environment & Energy, Inc. (formerly CH2M Hill Constructors, Inc.), BWXT TSG and Environmental Chemical Corporation. Services provided include project management and support services, site operations, maintenance, utilities, high-level waste canister relocation, facility disposition, waste tank farm management, U.S. Nuclear Regulatory Commission ("NRC") licensed disposal area management, waste management and nuclear materials disposition, and safeguards and security. A follow-on contract [Phase 1B] was awarded to a BWXT-led team and the CHBWV Phase 1 contract concluded on June 23, 2025.
•West Valley Demonstration Project Phase 1B. West Valley Cleanup Alliance, LLC is a limited liability company formed by BWXT TSG, Jacobs Technology, Inc. and Geosyntec Consultants, Inc. to achieve significant risk and financial liability reduction and provide the best overall optimal solution for accelerated completion and closure of the site near West Valley, New York. The Phase 1B contract began on June 24, 2025 and will continue the current cleanup mission and will include the demolition of remaining components of the main plant process building, soil remediation and disposition, waste management and disposition, environmental monitoring, surveillance and maintenance and program support activities.
•Synergy Achieving Consolidated Operations & Maintenance (SACOM). Syncom Space Services, LLC is a limited liability company formed by PAE Applied Technologies, LLC (acquired by Amentum in 2022) and BWXT Nuclear Operations Group, Inc. to provide facility operations and maintenance services for institutional and technical facilities, and perform test and manufacturing support services at two NASA facilities – the Stennis Space Center in Hancock County, Mississippi and the Michoud Assembly Facility in New Orleans, Louisiana. A reduced scope, follow-on contract was awarded by NASA to another contractor in 2024 and transition was completed in June 2025.
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•Paducah Gaseous Diffusion Plant Deactivation and Remediation Project. Four Rivers Nuclear Partnership, LLC is a limited liability company formed by Amentum Environment & Energy, Inc. (formerly CH2M Hill Constructors, Inc.), BWXT TSG and Fluor Federal Services, Inc. to provide nuclear operations, deactivation and remediation services at the Paducah Gaseous Diffusion Plant in Paducah, Kentucky.
•Pantex Plant. PanTeXas Deterrence, LLC is a limited liability company formed by BWXT TSG, Fluor Federal Services, Inc, SOC LLC and The Texas A&M University System to provide nuclear production operations services, long-term plant modernization and capability enhancement/stewardship along with other required services to support the NNSA and broader national security requirements assigned to the Pantex Plant near Amarillo, Texas.
•Hanford Integrated Tank Disposition Contract. Hanford Tank Waste Operations & Closure, LLC is a limited liability company formed by BWXT TSG, Amentum Environment & Energy, Inc. and Fluor Federal Services, Inc. to achieve significant risk and financial liability reduction through accelerated cleanup of high-risk waste at the DOE-owned Hanford Tank Farms near Richland, Washington.
•Strategic Petroleum Reserve Contract. Strategic Storage Partners, LLC (SSP) is a limited liability company formed by APTIM and BWXT TSG to manage and operate the United States’ strategic crude oil storage facilities, including operations, logistics, maintenance, major maintenance, and life extension activities while still preserving drawdown readiness. The contract began on November 24, 2025.
•Canadian National Laboratory Management and Operations Contract. Nuclear Laboratory Partners of Canada, Inc. (NLPC) is a company formed by BWXT Government Group, Kinectrics, Inc., and Amentum Environment & Energy, Inc. to manage and operate the Canadian National Laboratory. The contract began on December 11, 2025.
Commercial Operations
•Isogen. Isogen is a joint venture between Framatome and Kinectrics to use CANDU nuclear reactors to provide irradiation services to isotope processors and radiopharmaceutical manufactures to deliver them with a reliable supply of medical isotopes. This joint venture was created prior to BWXT's acquisition of Kinectrics in 2025.
Customers
We provide our products and services to a diverse customer base, including the U.S. Government, utilities and other customers in the nuclear power and radiopharmaceutical industries. Our largest and primary customer of our Government Operations segment is the U.S. Government. During the years ended December 31, 2025, 2024 and 2023, the U.S. Government represented approximately 68%, 76% and 75% of our total consolidated revenues, respectively. No individual non-U.S. Government customer accounted for more than 10% of our consolidated revenues in the years ended December 31, 2025, 2024 or 2023.
Raw Materials and Suppliers
Our operations use raw materials, such as carbon and alloy steels in various forms and components and accessories for assembly, which are available from numerous sources. We generally purchase these raw materials and components as needed for individual contracts. Although shortages of some raw materials have existed occasionally, no serious shortage exists at the present time.
Our Government Operations and Commercial Operations segments rely on a limited number of suppliers, including single-source suppliers, for certain materials used in our products; however, we believe the suppliers of these materials are reliable. Additionally, we and the U.S. Government expend significant effort to monitor and maintain the supplier base for our Government Operations segment.
Human Capital Management
People Strong, Innovation Driven
Our employees are responsible for providing safe and effective nuclear solutions for global security, clean energy, environmental restoration, nuclear medicine and space exploration. We encourage innovation to develop new technologies, improve our products and open new markets.
Our goal is to be the employer of choice within our industry and the communities in which we operate. We focus on maintaining a solid pipeline of talent throughout our organization and developing the capabilities and skills in our workforce
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needed for the future of our business. We strive to maintain a highly-skilled workforce where employees are recruited, compensated, retained and promoted based on their performance and contribution to the Company.
Employees
At December 31, 2025, we employed approximately 10,400 persons worldwide, predominantly in the U.S. (6,700 employees) and Canada (3,500 employees) with approximately 200 additional employees resident in Denmark, Germany, India, Poland, Romania, and the United Kingdom. Many of our operations are subject to union contracts, which we negotiate periodically. At December 31, 2025, approximately 3,200 of our employees were members of labor unions. We consider our relationships with our employees to be satisfactory.
Employee Compensation and Benefits
Our compensation plans are designed to reward our employees for achieving and exceeding objectives that create long-term value for shareholders. The success and growth of our business is attributable to our ability to attract, develop, engage and retain talented and high-performing employees at all levels in our Company. Our compensation programs are further designed to ensure we remain competitive relative to the markets in which we operate; provide meaningful value to employees and those they care for; incentivize the short- and long-term success of BWXT and its stakeholders through programs with consistent performance measures throughout the organization; and recognize employees who make outstanding contributions to the organization.
Providing comprehensive, competitive, and affordable retirement, healthcare, income protection and other benefits is also central to our attraction and retention strategy. We offer an array of health benefits which include medical/pharmacy plan options, along with dental, vision and other wellness-specific plans as applicable, and as customarily provided in the locations in which we operate. Our income protection plans provide coverage for employees in the event of an unexpected illness or injury. We also offer retirement, investment, and tax savings/deferral opportunities to our employees.
Employee Development
The professional development of our employees is critical to our success. We offer online and in-person professional development and training, as well as mentoring programs, to enhance the knowledge, skills and advancement opportunities for our employees. To further our employee development goals, we partner with a number of educational institutions for accredited, vocational and technical upskilling programs. We provide tuition reimbursement to employees pursuing job-related, career enhancing courses and provide full tuition grants for the completion of undergraduate and graduate degree programs through an accredited university partner. For employees identified with high potential for promotion to leadership roles, we routinely offer leadership development programs focused on preparing future leaders for their next career steps.
We established the BWXT Technical Fellows program which honors and celebrates some of our most talented employees for their contributions to driving innovation and inspiring creativity. Our Technical Fellows offer a breadth of knowledge and technical expertise that can be focused on developing creative solutions to numerous challenges we face in our industry.
Health and Safety
The safety of our employees is critical to our success as a specialty manufacturer of nuclear fuel, nuclear components, nuclear medicine products and an operator of high-consequence nuclear and national security facilities for the U.S. Government. As such, we are committed to maintaining the highest safety, security, ethical and environmental standards. We maintain comprehensive safety programs focused on identifying risks and eliminating hazards that could lead to personnel injuries or environmental impacts. We provide our employees upfront and ongoing training to ensure that environmental, health and safety policies and procedures are effectively communicated and implemented.
We operate NRC Category 1 and Canadian Nuclear Safety Commission ("CNSC") licensed facilities and have instilled as a core value a culture that prioritizes safety with a vision of zero injuries and incidents at all of our work locations. In pursuit of an injury-free workplace, we constantly monitor and assess all injuries and "near misses" for any lessons we can learn and leverage to reduce the risk inherent in occupational activities. In addition to providing regular safety training to our employees, we routinely conduct safety culture surveys to identify employee concerns. We use this information to further improve our safety culture and programs in an effort to prevent future occupational and environmental incidents.
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Ethics and Integrity
We believe that maintaining a work environment that recognizes effort and teamwork, values mutual respect and open communication, and demonstrates care and concern for our employees' well-being is essential to retaining an engaged and productive workforce. Our Code of Business Conduct ("Code") establishes the principles and standards that we expect our employees to follow. Each officer, director and employee is required to use good ethical judgment when conducting business; be respectful of colleagues, business partners, customers and others in their interactions; and comply with applicable laws, rules, and regulations. The Code describes what is appropriate behavior and guides ethical business decisions that maintain a commitment to integrity. In furtherance of this objective, we provide regular training on the Code for our employees to identify and prevent misconduct, and the Code requires that employees report situations that violate our policies and/or negatively impact our work environment. In addition, we maintain the BWXT Ethics Helpline to allow employees to report any concerns relating to ethics or other concerns confidentially and, if they choose, anonymously. We investigate and take prompt action to correct conduct that is inconsistent with our Code and other policies.
Patents and Technology Licenses
We currently hold a large number of U.S. and foreign patents and have patent applications pending in certain technologies, including nuclear reactor systems, components and fuel, advanced and additive manufacturing, space nuclear propulsion, and radioisotope production. We acquire patents and technology licenses and grant licenses to others when we consider it advantageous for us to do so. Although in the aggregate our patents and technology licenses are important to us, we do not regard any single patent or license or group of related patents or licenses as critical or essential to our business as a whole. In general, we depend on our technological capabilities and the application of know-how, rather than patents and technology licenses, in the conduct of our various businesses.
Research and Development Activities
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. These activities include the development of isotope production, medical radiochemical and radiopharmaceutical production and a variety of advanced technologies in the areas of additive and autonomous manufacturing, space nuclear power and propulsion, and high-temperature gas-cooled reactors, among others. These projects are sponsored and funded through internal research and development and by a number of commercial and government customers.
We charge the costs of research and development unrelated to specific contracts as incurred. Excluding customer-sponsored research and development, the majority of our activities in this area for the years ended December 31, 2025, 2024 and 2023 related to the development of technologies in the area of medical and industrial radioisotopes, radiopharmaceuticals, additive and autonomous manufacturing, advanced reactors and nuclear fuel. Contractual arrangements for customer-sponsored research and development can vary and include contracts, cost-sharing arrangements, cooperative agreements and grants.
See Note 1 to our consolidated financial statements included in this Report for further information on research and development.
Hazard Risks and Insurance
Our operations present risks of injury to or death of people, loss of or damage to property and damage to the environment. We have created loss control systems and processes to assist us in the identification and treatment of the hazard risks presented by our operations, and we endeavor to make sure these systems are effective.
As loss control measures will not always be successful, we seek to establish various means of funding losses and transferring financial liability related to incidents or occurrences. We primarily seek to do this through contractual protections, including waivers of consequential damages, indemnities, caps on liability, liquidated damages provisions and access to the insurance of other parties. We also procure insurance, operate our own captive insurance company and establish funded and/or unfunded reserves. However, none of these methods will eliminate all risks.
Depending on competitive conditions, the nature of the work, industry custom and other factors, we may not be successful in obtaining adequate contractual protection from our customers and other parties against losses and liabilities arising out of or related to the performance of our work. The scope of the protection may be limited, may be subject to conditions and may not be supported by adequate insurance or other means of risk financing. In addition, we may have difficulty enforcing our contractual rights with others following a material loss.
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Similarly, insurance for certain potential losses or liabilities may not be available or may only be available at a cost or on terms we consider not to be economical. Insurers frequently react to market losses by ceasing to write or severely limiting coverage for certain exposures. Risks that we have frequently found difficult to cost-effectively insure against include, but are not limited to, property losses from wind, flood and earthquake events, nuclear hazards, war, pollution liability (including per- and polyfluoroalkyl substances), liabilities related to occupational health exposures (including asbestos), professional liability, errors and omissions coverage, the failure, misuse or unavailability of our information and/or operational technology systems, the failure of security measures designed to protect our information technology systems from security breaches and liability related to risk of loss of our work in progress and customer-owned materials in our care, custody and control. In cases where we purchase insurance, we are subject to the creditworthiness of the relevant insurer(s), the available limits of the coverage, our retention under the relevant policy, exclusions in the policy and gaps in coverage.
Our operations in designing, engineering, manufacturing, constructing and servicing nuclear power equipment and components for our commercial nuclear utility customers subject us to various risks, including, without limitation, damage to our customers' property and third-party claims for personal injury, environmental liability, death and property damage. To protect against liability for damage to a customer's property, we endeavor to obtain waivers of liability and subrogation from the customer and its insurer. We also attempt to cap our overall liability in our contracts. To protect against liability from claims brought by third parties in the U.S., we seek to be insured under the utility customer's nuclear liability policies and have the benefit of the indemnity and limitation of any applicable liability provision of the Price-Anderson Act. The Price-Anderson Act limits the public liability of U.S. manufacturers and operators of licensed nuclear facilities and other parties who may be liable in respect of, and indemnifies them against, all claims in excess of a statutory amount. This amount is determined by the sum of commercially available liability insurance plus certain retrospective premium assessments payable by operators of commercial nuclear reactors. For those sites where we provide environmental remediation services, we seek the same protection from our customers as we do for our other nuclear activities. Contracts that were entered into during a period of time that the Price-Anderson Act was in full force and effect continue to receive the benefit of the Price-Anderson Act's nuclear indemnity. The Price-Anderson Act is set to expire on December 31, 2065. We also provide nuclear fabrication and other services to the nuclear power industry in Canada. Canada's Nuclear Liability and Compensation Act ("NLCA") generally conforms to international conventions and is conceptually similar to the Price-Anderson Act in the U.S. Accordingly, indemnification protections and the possibility of exclusions under Canada's NLCA are similar to those under the Price-Anderson Act in the U.S.
Our Commercial Operations segment supplies commercial nuclear equipment and services to certain customers in countries other than the U.S. and Canada that are party to international treaties and in countries that are not signatory to international treaties but have their own nuclear liability laws that, in general, have regulations in place whereby nuclear operators are solely liable for nuclear damage claims, which would exclude nuclear suppliers from any such exposure. BWXT does retain some level of risk in the event of future changes to the legal landscape in these countries regarding international third-party nuclear liability.
In 2008, the U.S. ratified the Convention on Supplementary Compensation for Nuclear Damage ("CSC") with the International Atomic Energy Agency. The CSC is an international treaty developed to create a global legal framework for allocating responsibility and assuring prompt and equitable compensation in the unlikely event of certain nuclear incidents. The ratification by the U.S. authorizes the Secretary of Energy to issue regulations establishing a retrospective risk pooling program whereby, in the event that the U.S. must make a contribution to the CSC international fund, U.S. nuclear suppliers, including BWXT, would pay the full cost of this contribution by the U.S.
Although we do not own or operate any nuclear reactors, we have some coverage under commercially available nuclear liability and property insurance for our facilities that are currently licensed to possess special nuclear materials. Substantially all of our Government Operations segment contracts involving nuclear materials are covered by and subject to the nuclear indemnity provisions of either the Price-Anderson Act or Public Law 85-804, which, among other things, authorizes the DOE to indemnify certain contractors when such acts would facilitate national defense. However, to the extent the value of the nuclear materials in our care, custody or control exceeds the commercially available limits of our insurance, we potentially have underinsured risk of loss for such nuclear material.
Our Government Operations segment participates in the management and operation of various U.S. Government facilities. This participation is customarily accomplished through the participation in joint ventures with other contractors for any given facility. These activities involve, among other things, handling nuclear devices and their components. Insurable liabilities arising from these sites are rarely protected by our or our partners' corporate insurance programs. Instead, we rely on government contractual agreements and insurance purchased specifically for a site. The U.S. Government has historically fulfilled its contractual agreement to reimburse its contractors for covered claims, and we expect it to continue this process during our participation in the management and operation of these facilities. However, in most of these situations in which the
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U.S. Government is contractually obligated to pay, the payment obligation is subject to the availability of authorized government funds. The reimbursement obligation of the U.S. Government is also conditional, and provisions of the relevant contract or applicable law may preclude reimbursement.
Our wholly owned captive insurance subsidiary provides primary workers' compensation, employer's liability, commercial general and excess liability, automotive liability and property insurance to support our operations. Liabilities include provisions for estimated losses incurred but not reported ("IBNR"), as well as estimated provisions for known claims. IBNR reserve estimates are primarily based upon historical loss experience, industry data and other actuarial assumptions. Reserve estimates are adjusted in future periods as actual losses differ from experience. Through our insurance subsidiary, we also have reinsurance coverage with third parties for certain losses above a per occurrence and/or aggregate retention. Receivables for reinsurance coverage are recognized when realization is deemed probable. We may also have business reasons in the future to have our insurance subsidiary accept other risks that we cannot or do not wish to transfer to outside insurance companies. These risks may be considerable in any given year or cumulatively. Our insurance subsidiary does not provide insurance to unrelated parties. Claims as a result of our operations could adversely impact the ability of our insurance subsidiary to respond to all claims presented.
Additionally, 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.
Governmental Regulations and Environmental Matters
Governmental Regulations
Many aspects of our operations and properties are affected by political developments and are subject to both domestic and foreign governmental laws, regulations and presidential executive orders, including those relating to:
•possessing and processing special nuclear materials;
•workplace health and safety;
•constructing and equipping electric power facilities;
•currency conversions and repatriation;
•taxation of earnings;
•protecting the environment; and
•dividends, repurchasing shares and executive compensation.
We are required by various governmental and quasi-governmental agencies to obtain certain permits, licenses and certificates with respect to our operations. The kinds of permits, licenses and certificates required in our operations depend upon a number of factors.
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We cannot determine the extent to which new legislation, regulations or presidential executive orders or changes in existing laws, regulations or presidential executive orders may affect our future operations.
Environmental
Our operations and properties are subject to a wide variety of increasingly complex and stringent federal, foreign, state and local environmental laws and regulations, including those governing discharges into the air and water, the handling, storage and disposal of mixed, solid and hazardous wastes, the remediation of soil and groundwater contaminated by hazardous substances and the health and safety of employees. Sanctions for non-compliance may include revocation of permits, corrective action orders, administrative or civil penalties and criminal prosecution. Some environmental laws provide for strict, joint and several liability for remediation of spills and other releases of hazardous substances, as well as damage to natural resources. In addition, companies may be subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances. Such laws and regulations may also expose us to liability for the conduct of or conditions caused by others or for our acts that were in compliance with all applicable laws at the time such acts were performed.
These laws and regulations include the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"), the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act and similar laws that provide for responses to, and liability for, releases of hazardous substances into the environment. These laws and regulations also include similar foreign, state or local counterparts to these federal laws, which regulate air emissions, water discharges, hazardous substances and waste and require public disclosure related to the use of various hazardous substances. Our operations are also governed by laws and regulations relating to workplace safety and worker health, including the U.S. Occupational Safety and Health Act and regulations promulgated thereunder.
We are currently in the process of investigating and remediating some of our current and former operating sites. Although we have recorded reserves in connection with certain of these environmental matters, due to the uncertainties associated with environmental remediation, there can be no assurance that the actual costs resulting from these remediation matters will not exceed the recorded reserves.
Our compliance with federal, foreign, state and local environmental control and protection regulations resulted in pre-tax expense of approximately $20.3 million, $22.7 million and $20.0 million in the years ended December 31, 2025, 2024 and 2023, respectively. In addition, compliance with existing environmental regulations necessitated capital expenditures of $1.2 million, $0.8 million and $0.7 million in the years ended December 31, 2025, 2024 and 2023, respectively. We expect to spend another $4.5 million on such capital expenditures over the next five years. We cannot predict all of the environmental requirements or circumstances that will exist in the future, but we anticipate that environmental control and protection standards will become increasingly stringent and costly. Based on our experience to date, we do not currently anticipate any material adverse effect on our business or consolidated financial condition as a result of future compliance with existing environmental laws and regulations. However, future events, such as changes in existing laws and regulations or their interpretation, more vigorous enforcement policies of regulatory agencies or stricter or different interpretations of existing laws and regulations, may require additional expenditures by us, which may be material. Accordingly, we can provide no assurance that we will not incur significant environmental compliance costs in the future.
We have been identified as a potentially responsible party at various cleanup sites under CERCLA. CERCLA and other environmental 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.
Environmental remediation projects have been and continue to be undertaken at certain of our current and former facilities. In 2002, Congress directed the U.S. Army Corps of Engineers ("Army Corps") to clean up radioactive waste at the Shallow Land Disposal Area located in Parks Township, Armstrong County, Pennsylvania (the "SLDA"), consistent with the Memorandum of Understanding between the Nuclear Regulatory Commission and the United States Army Corps of Engineers for Coordination on Cleanup and Decommissioning of the Formerly Utilized Sites Remedial Action Program Sites with NRC-Licensed Facilities, dated July 5, 2001 (the "MOU"). From 1961 to 1970, the SLDA was operated by the Nuclear Materials and Equipment Corporation ("NUMEC") pursuant to Atomic Energy Commission ("AEC") License SNM-145. The AEC was the predecessor to the NRC. The SLDA was used for the disposal of waste from NUMEC's nuclear fuels fabrication facility in
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Apollo, Pennsylvania. Both radioactive and non-radioactive waste was disposed in a series of trenches at the SLDA. NUMEC, a former subsidiary of Atlantic Richfield Company ("ARCO"), was acquired by BWXT in November 1971. Shortly after the Army Corps' contractor commenced cleanup operations in 2011, the Army Corps ceased excavation activities because the contractor deviated from accepted field procedures, and the excavated material was found to be complex and beyond the Army Corps' characterization and management procedures. The MOU was modified in late 2014 to add the DOE and the NNSA as parties to deal with "special nuclear materials." In December 2014, the Army Corps issued a Proposed Record of Decision Amendment, which reflects a revised cost estimate of $350 million, in addition to the $62 million expended through September 2014, to implement the selected remedy. In October 2018, the Army Corps confirmed award of the previously protested remediation contract as amended to the original contractor. In March 2019, the Army Corps issued a notice-to-proceed to this contractor. The federal legislation directing the Army Corps to clean up the SLDA also directs the Army Corps to seek to recover response costs from appropriate responsible parties in accordance with CERCLA. In connection with BWXT's acquisition of NUMEC from ARCO in November 1971, ARCO assumed and agreed to indemnify and hold harmless BWXT with respect to claims and liabilities arising as a result of transactions or operations of NUMEC prior to the acquisition date. Although this ARCO indemnity would cover claims by the Army Corps to seek recovery from BWXT for SLDA cleanup costs, no assurance can be given that this indemnity will be available or sufficient in the event such claims are asserted. For additional discussion of environmental matters, see Note 10 to our consolidated financial statements included in this Report.
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 $71.5 million and $68.1 million during the years ended December 31, 2025 and 2024, 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 $32.5 million and $28.5 million during the years ended December 31, 2025 and 2024, respectively, with letters of credit and surety bonds for the ultimate decommissioning of these licensed facilities.
At December 31, 2025 and 2024, we had total environmental accruals, including asset retirement obligations, of $107.2 million and $103.4 million, respectively. Of our total environmental accruals at December 31, 2025 and 2024, $6.9 million and $9.2 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 we have provided for in our consolidated financial statements.
Cautionary Statement Concerning Forward-Looking Statements
From time to time, our management or persons acting on our behalf make forward-looking statements to inform existing and potential security holders about our Company. Statements and assumptions regarding expectations and projections of specific projects, our future backlog, revenues, income, capital spending, strategic investments, acquisitions or divestitures, return of capital activities or margin improvement initiatives are examples of forward-looking statements. Forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "plan," "seek," "goal," "could," "intend," "may," "should" or other words that convey the uncertainty of future events or outcomes. In addition, sometimes we will specifically describe a statement as being a forward-looking statement and refer to this cautionary statement.
Statements in this Report, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These forward-looking statements appear in Item 1, Item 3, Item 7 and in the notes to our consolidated financial statements in Item 8 of this Report and elsewhere in this Report.
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We have based our forward-looking statements on information currently available to us and our current expectations, estimates and projections about our industries, business environment and our Company. We caution that these statements are not guarantees of future performance, and you should not rely unduly on them as they involve risks, uncertainties and assumptions that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. While our management considers these statements and assumptions to be reasonable, they are inherently subject to numerous factors, including potentially the risk factors described in the section labeled Item 1A of this Report, most of which are difficult to predict and many of which are beyond our control. As a contractor to the U.S. Government, such risks include, without limitation, budget uncertainty, the risk of future budget cuts, the impact of continuing resolution funding mechanisms and the debt ceiling, the risk of government shutdowns, including program cancellations, schedule delays, production halts and other disruptions and nonpayment, and changing funding and acquisition priorities. Accordingly, our actual results may differ materially from the future performance that we have expressed or forecast in our forward-looking statements.
We have discussed many of these factors in more detail elsewhere in this Report. These factors are not necessarily all the factors that could affect us. Unpredictable or unanticipated factors we have not discussed in this Report could also have material adverse effects on actual results of matters that are the subject of our forward-looking statements. We do not intend to update or review any forward-looking statement or our description of important factors, whether as a result of new information, future events or otherwise, except as required by applicable laws.
Available Information
Our website address is www.bwxt.com. We make available through the Investors section of this website under "SEC Filings," free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, our proxy statement, statements of beneficial ownership of securities on Forms 3, 4 and 5 and amendments to those reports as soon as reasonably practicable after we electronically file those materials with, or furnish those materials to, the Securities and Exchange Commission ("SEC"). The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We have also posted on our website our: Corporate Governance Principles; Code of Business Conduct; Code of Ethics for our Chief Executive Officer and Senior Financial Officers; Director Conflict of Interest Policy; Amended and Restated Bylaws; and charters for the Audit and Finance, Governance and Compensation Committees of our Board of Directors.
Item 1A. RISK FACTORS
Industry Risks
We rely on U.S. Government contracts (either directly or as a sub-tier contractor to a government contractor) for a substantial percentage of our revenue, and some of those contracts are subject to continued appropriations by Congress and may be terminated or delayed if future funding is not made available. In addition, the U.S. Government may not renew or may seek to modify or terminate our existing contracts.
For the year ended December 31, 2025, whether directly or as a sub-tier contractor to a government contractor, U.S. Government contracts comprised approximately 68% of our total consolidated revenues. Government contracts are subject to various uncertainties, restrictions and regulations, including oversight audits, which could result in withholding or delaying payments to us, and termination or modification at the U.S. Government's convenience. In addition, some of our large, multi-year contracts with the U.S. Government are subject to annual funding determinations and the continuing availability of Congressional appropriations. Although multi-year operations may be planned in connection with major procurements, Congress generally appropriates funds on a fiscal-year basis even though a program may continue for several years. Consequently, programs often are only partially funded initially, and additional funds are committed only as Congress makes further appropriations.
In addition, our Government Operations segment depends on U.S. Government funding, particularly funding levels at the DOE. Significant reductions in the level of funding (for example, the annual budget of the DOE) or specifically mandated levels for individual programs that are important to our business could have an unfavorable impact on us. Any reduction in the level of U.S. Government funding, particularly at the DOE, may result in, among other things, a reduction in the number and scope of projects put out for bid by the U.S. Government or the curtailment of existing U.S. Government programs, either of which may result in a reduction in the number of contract award opportunities available to us, a reduction of activities at DOE sites and an increase in costs, including the costs of obtaining contract awards.
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We anticipate the federal budget will continue to be subject to debate and compromise shaped by, among other things, heightened political tensions, the global security environment, inflationary pressures and macroeconomic conditions. This may result in shifting funding priorities, which could have material adverse impacts on defense spending broadly and our programs.
The U.S. Government typically can terminate or modify any of its contracts with us either for its convenience or if we default by failing to perform under the terms of the applicable contract. A termination arising out of our default could expose us to liability and have an adverse effect on our ability to compete for future contracts and orders. If any of our contracts reflected in backlog are terminated by the U.S. Government, our backlog would be reduced by the expected value of the remaining work under such contracts. In addition, on those contracts for which we are teamed with others and are not the prime contractor, the U.S. Government could terminate a prime contract under which we are a subcontractor, irrespective of the quality of our products and services as a subcontractor. Furthermore, certain of our U.S. Government contracts span one or more base years and multiple option years. The U.S. Government generally has the right not to exercise option periods and may not exercise an option period for various reasons.
We also have several significant contracts with the U.S. Government that are subject to periodic renewal and rebidding through a competitive process. If the U.S. Government fails to renew these contracts or modifies key terms, our results of operations and cash flows would be adversely affected.
As a result of these and other factors, reductions in the level of funding for individual programs that are important to our business, the termination of one or more of our significant government contracts, our suspension from government contract work, the failure of the U.S. Government to renew our existing contracts or the disallowance of the payment of our contract costs could have a material adverse effect on our financial condition, results of operations and cash flows.
Federal debt ceiling limitations, reductions in government spending, or impacts to federal appropriations that fund many of our contracts (such as those impacts arising from a continuing resolution or government shutdown), could adversely impact government spending for the products and services we provide.
Federal government spending reductions could adversely impact U.S. Government programs for which we provide products or services. While we believe many of our programs are well-aligned with national defense and other strategic priorities, government spending on these programs can be subject to negative publicity, political factors and public scrutiny. The risk of future budget delays or reductions is uncertain, and it is possible that spending cuts may be applied to U.S. Government programs across the board, regardless of how programs align with those priorities. There are many variables in how budget reductions could be implemented that will determine its specific impact; however, reductions in federal government spending could adversely impact programs in which we provide products or services. In addition, these cuts could adversely affect the viability of the suppliers and subcontractors under our programs. We may also be required to temporarily maintain operations of our joint ventures if the U.S. Government can no longer meet its debt obligations.
From time to time, the U.S. Government operates under a continuing resolution to continue funding the U.S. Government. Under such a continuing resolution, funding at amounts consistent with appropriated levels for the prior fiscal year are typically available, subject to certain restrictions, but new contract and program starts are not authorized. During periods covered by a continuing resolution, we expect our key programs will continue to be supported and funded under the continuing resolution. However, during periods covered by a continuing resolution, we may experience delays in new awards of our products and services, and those delays could have a material adverse effect on our financial condition, results of operations and cash flows. If Congress is not able to enact appropriations bills or extend a continuing resolution, the U.S. Government would enter a whole or partial shutdown. Additionally, there is a risk that no continuing resolution would be entered into in certain circumstances, which would also cause a whole or partial government shutdown. In the event of a government shutdown, there is uncertainty regarding which government functions would shut down or continue operations during a lapse in appropriations, and corresponding uncertainty regarding the extent or magnitude of potential impacts to our operations. If a government shutdown were to occur and were to continue for an extended period, our employees could be at risk of furlough and we could be at risk of program cancellations, schedule delays, production halts and other disruptions and nonpayment, which could have a material adverse effect on our financial condition, results of operations and cash flows.
Demand for our products and services is vulnerable to economic downturns, the competitiveness of alternative energy sources and industry conditions. In addition, unfavorable economic conditions may lead customers to delay, curtail or cancel proposed or existing projects, which may decrease the overall demand for our products and services and adversely affect our results of operations.
Demand for our products and services has been, and we expect that demand will continue to be, subject to significant fluctuations due to a variety of factors beyond our control, including economic and industry conditions. These factors include,
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but are not limited to, inflation, geopolitical issues, the availability and cost of credit, the demand for and competitiveness of nuclear power with other energy sources, the cyclical nature of the power generation industry, low business and consumer confidence, high unemployment, energy conservation measures and decisions of utilities that operate nuclear power plants.
Our customers may find it more difficult to raise capital in the future due to limitations on the availability of credit, increases in interest rates and other factors affecting the federal, municipal and corporate credit markets. Additionally, our customers may demand more favorable pricing terms and find it increasingly difficult to timely pay invoices for our products and services, which would impact our future cash flows and liquidity. Inflation or significant changes in interest rates could reduce the demand for our products and services. Any inability to timely collect our invoices may lead to an increase in our accounts receivables and potentially to increased write-offs of uncollectable invoices. If the economy weakens, or customer spending declines, then our backlog, revenues, net income and overall financial condition could deteriorate. As a result, we may find it more difficult to raise capital in the future due to limitations on the availability of credit, increases in interest rates, changes in regulatory requirements, new investor requirements, such as stakeholder expectations regarding environmental, social and governance matters, and other factors affecting our access to the capital markets.
Our future business prospects in Canada are dependent upon the continued operation of Canadian nuclear plants and refurbishment of the majority of the plants in Ontario to extend their operating lives. Unfavorable economic conditions, competition from other forms of power generation, increased competition for refurbishment contracts, changes in government policy or operational or project execution issues may lead nuclear plant operators in Canada to cease operations or delay, curtail or cancel proposed or existing life-extension projects, which may decrease the overall demand for our products and services in Canada and adversely affect our financial condition, results of operations and cash flows.
We are subject to risks associated with contractual pricing in our industries, including the risk that, if our actual costs exceed the costs we estimate on our fixed-price contracts, our profitability will decline and we may suffer losses.
We are engaged in a number of highly competitive industries and we have priced a number of our contracts on a fixed-price basis. Our actual costs on certain contracts have, and on other contracts could, exceed our projections, which has resulted, and may in the future also result in reduced profit or loss. We attempt to cover the increased costs of anticipated changes in labor, material and service costs of long-term contracts, either through estimates of cost increases, which are reflected in the original contract price, or through price escalation clauses. Despite these attempts, the cost and gross profit we realize on a fixed-price contract have and could vary materially from the estimated amounts because of supplier, contractor and subcontractor performance, execution issues, changes in job conditions, variations in labor and equipment productivity, inflation and increases in the cost of labor and raw materials, particularly steel, over the term of the contract.
These variations and the risks generally inherent in our industries may result in actual revenues or costs being different from those we originally estimated and may result in reduced profitability or losses on projects. Some of these risks include:
•difficulties encountered on our large-scale projects related to the procurement of materials or due to schedule disruptions, equipment performance failures, unforeseen site conditions, rejection clauses in customer contracts or other factors that may result in additional costs to us, reductions in revenue, claims or disputes;
•our inability to obtain compensation for additional work we perform or expenses we incur as a result of our customers providing deficient design, engineering information, equipment or materials;
•requirements to pay liquidated damages upon our failure to meet schedule or performance requirements of our contracts; and
•difficulties in engaging third-party subcontractors, equipment manufacturers or materials suppliers or failures by third-party subcontractors, equipment manufacturers or materials suppliers to perform could result in project delays and cause us to incur additional costs.
Our operations in foreign countries expose us to currency, political and trade risks, including from tariffs, trade barriers, and other protectionist or retaliatory measures, which could impact our results of operations.
We have significant manufacturing and sales operations in foreign countries, particularly in Canada. Our financial results may be adversely affected by fluctuations in foreign currencies and by the translation of the financial statements of our foreign subsidiaries from local currencies into U.S. dollars. Both the sales from international operations and export sales are subject to varying degrees of risks inherent in doing business outside of the U.S. Such risks include the possibility of unfavorable circumstances arising from host country laws or regulations including, but not limited to changes in tariff and trade barriers.
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Uncertainty remains with respect to trade policies and treaties between the U.S. and other countries, including Canada, where we manufacture heavy nuclear components and products for our medical radioisotopes business that may be sold to US customers. Legislation or actions taken by the U.S. federal government, Canadian government or other foreign governments that restrict trade, such as tariffs, trade barriers, and other protectionist or retaliatory measures, could adversely impact our profitability and ability to sell products and services. For example, new or increased tariffs would increase the cost of our products and the components and raw materials that go into making them. These increased costs could adversely impact the gross margin that we earn on our products, which could make our products less competitive and reduce demand from customers. The ultimate impact of any tariffs will depend on various factors, including if any tariffs are ultimately implemented, the timing of implementation, contractual terms, and the amount, scope, and nature of the tariffs.
Tariffs and other restrictive trade measures may require us to take various actions, including changing suppliers and restructuring business relationships. Changing our operations in accordance with new or changed trade restrictions can be expensive, time-consuming, disruptive to our operations and distracting to management. Tariffs and trade restrictions can be announced with little or no advance notice, and we may not be able to effectively mitigate all adverse impacts from such measures.
Operational Risks
Our business could be negatively impacted by security threats, including physical and cybersecurity threats, and other disruptions.
We face various security threats, including cyber threats, threats to the physical security of our facilities and infrastructure (including those that we manage and operate for our customers), and threats from terrorist acts, as well as the potential for business disruptions associated with these threats. Further, security breaches within our supply chain or unauthorized disclosures of confidential information could also adversely affect our business and reputation. Although we utilize a combination of tailored and industry standard security measures and technology to monitor and mitigate these threats, we cannot guarantee that these measures and technology will be sufficient to prevent security threats from materializing.
We have been, and will likely continue to be, subject to cyber-based attacks and other attempts to threaten our information technology systems, including attempts to gain unauthorized access to our proprietary and sensitive information and attacks from computer hackers, viruses, malicious code, internal threats and other security problems. As a U.S. Government contractor, we may be prone to a greater number of these threats than companies in other industries. These threats range from attacks common to most industries to more advanced and persistent threats from highly-organized adversaries targeting us because we are a U.S. Government contractor. We are required to maintain minimum security standards for handling information under our government contracts and failure to do so could result in termination of those contracts. For example, as a contractor to the DoW, we are required to comply with applicable cybersecurity standards, including the DoW's Cybersecurity Maturity Model Certification, ("CMMC") program. CMMC requirements may change over time and could impose additional compliance obligations on us and our suppliers, and failure to meet applicable CMMC requirements could affect our ability to receive or perform certain defense-related contracts. We continue to monitor evolving data-privacy requirements and the use of emerging technologies, such as artificial intelligence, and maintain policies intended to promote their secure and responsible use. From time to time, we experience system interruptions and delays; however, prior cyber-based attacks directed at us have not had a material adverse impact on our results of operations. Due to the evolving nature of these security threats, the impact of any future incident cannot be predicted. If we are unable to protect our proprietary and sensitive information, our customers could question the adequacy of our threat mitigation and detection processes and procedures, which could negatively impact our reputation and present and future business. Moreover, the rapid evolution and increased sophistication, availability, and use of artificial intelligence technologies may exacerbate our cybersecurity risks by use of these technologies by us, our customers, suppliers, business partners, third-party providers, and bad actors. These trends may increase the likelihood of cybersecurity events occurring.
The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Occurrence of any of these events could adversely affect our internal operations, the services we provide to customers, the value of our investment in research and development efforts and other intellectual property, our future financial results, our reputation or our stock price.
In addition, we maintain, replace and/or upgrade current financial, human resources and other information technology systems. These activities subject us to inherent costs and risks associated with replacing and updating these systems, including potential disruption of our internal control structure, substantial capital expenditures, demands on management time and other risks of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. Our systems implementations and upgrades may not result in productivity improvements at the levels anticipated, or at all. In
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addition, the implementation of new technology systems may cause disruptions in our business operations. Such disruptions and any other information technology system disruptions, and our ability to mitigate these disruptions, if not anticipated and appropriately mitigated, could have a material adverse effect on our business.
Actual or threatened public health epidemics, pandemics or outbreaks, such as COVID-19, could have a material adverse effect on our business and results of operations.
Actual or threatened public health epidemics, pandemics or outbreaks, such as the global outbreak of COVID-19, could materially adversely affect our business. By disrupting our employees, suppliers, contractors, customers or facilities through illness, quarantines, government-mandated shutdowns, cost increases, operational restrictions, and unfavorable contract impacts that may not be fully recoverable through insurance or government assistance.
Such events may also negatively affect global economic conditions, and the ultimate impact on our business may depend on uncertain future developments, including the severity of the outbreak and measures taken to contain it.
We rely on intellectual property law and confidentiality agreements to protect our intellectual property. We also rely on intellectual property we license from third parties. Failure to protect our intellectual property rights, alleged infringement of third-party intellectual property rights or our inability to obtain or renew licenses to use intellectual property of third parties, could adversely affect our business.
Our success depends, in part, on our ability to protect our proprietary information and other intellectual property. Our intellectual property could be stolen, challenged, invalidated, circumvented or rendered unenforceable. Furthermore, the increased use of artificial intelligence may raise potential liabilities related to privacy and intellectual property or result in a loss of intellectual property. In addition, effective intellectual property protection may be limited or unavailable in certain jurisdictions where we operate.
Our failure to protect our intellectual property rights may result in the loss of valuable technologies or adversely affect our competitive business position. We rely significantly on proprietary technology, information, processes and know-how that are not subject to patent or copyright protection. We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors or other parties, as well as through other security measures. These agreements and security measures may be inadequate to deter or prevent misappropriation of our confidential information. In the event of an infringement of our intellectual property rights, a breach of a confidentiality agreement or divulgence of proprietary information, we may not have adequate legal remedies to protect our intellectual property. In addition, third parties may allege that we have infringed their intellectual property rights, which could result in litigation. Litigation to protect, defend or determine the scope of intellectual property rights, even if ultimately successful, could be costly and could divert management's attention away from other aspects of our business. In addition, our trade secrets may otherwise become known or be independently developed by competitors.
In some instances, we have augmented our technology base by licensing the proprietary intellectual property of third parties. In the future, we may not be able to obtain necessary licenses on commercially reasonable terms, which could have a material adverse effect on our operations.
Our operations are subject to disruption caused by severe weather, environmental and natural disasters and other natural and man-made events that could adversely affect our manufacturing facilities or the infrastructure necessary to support them. Our ability to operate or operate profitably could be significantly impacted, which could have a material adverse effect on our business, financial condition and results of operations.
We operate a number of large manufacturing facilities in the U.S. and Canada, including NRC Category 1 and CNSC-licensed nuclear manufacturing and fuel facilities. While we have experienced disruptions due to severe weather, environmental and natural disasters and other natural and man-made events in the past, including a recent facility closure due to Hurricane Helene, none have had a material adverse effect on our business or operations to date. Similar events impacting the facilities of our customers, suppliers and other subcontractors could also impact our business or disrupt our operations. If insurance or other risk mitigating mechanisms are insufficient for us to recover our costs and resume operations in a timely fashion, it could have a material adverse effect on our business, financial condition and results of operations.
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Our operations are subject to operating risks, which could expose us to potentially significant professional liability, product liability, warranty and other claims. Our insurance coverage may be inadequate to cover all of our significant risks, or our insurers may deny coverage of material losses we incur, which could adversely affect our profitability and overall financial condition.
We operate large manufacturing facilities and perform services in large commercial power plants where accidents or system failures can have significant consequences. Risks inherent in our operations include:
•accidents resulting in injury or the loss of life or property;
•environmental or toxic tort claims, including delayed manifestation claims for personal injury or loss of life;
•pollution or other environmental mishaps;
•natural disasters;
•adverse weather conditions;
•mechanical or design failures;
•property losses;
•business interruption due to political action in foreign countries or other reasons; and
•labor stoppages.
Any accident or failure at a site where we have provided products or services could result in significant professional liability, product liability, warranty and other claims against us, regardless of whether our products or services caused the incident. We have been, and in the future we may be, named as defendants in lawsuits asserting large claims as a result of litigation arising from events such as those listed above.
We endeavor to identify and obtain, in established markets, insurance agreements to cover significant risks and liabilities. Insurance against some of the risks inherent in our operations is either unavailable or available only at rates or on terms that we consider uneconomical. Also, catastrophic events customarily result in decreased coverage limits, more limited coverage, additional exclusions in coverage, increased premium costs and increased deductibles and self-insured retentions. Risks that we have frequently found difficult to cost-effectively insure against include, but are not limited to, business interruption, property losses from wind, flood and earthquake events, nuclear hazards, war, pollution liability, liabilities related to occupational health exposures (including asbestos), professional liability/errors and omissions coverage, the failure, misuse or unavailability of our information systems, the failure of security measures designed to protect our information systems from security breaches, and liability related to risk of loss of our work in progress and customer-owned materials in our care, custody and control. Depending on competitive conditions and other factors, we endeavor to obtain contractual protection against certain uninsured risks from our customers. When obtained, such contractual indemnification protection may not be as broad as we desire or may not be supported by adequate insurance maintained by the customer. Such insurance or contractual indemnity protection may not be sufficient or effective under all circumstances or against all hazards to which we may be subject. A successful claim for which we are not insured or for which we are underinsured could have a material adverse effect on us. Additionally, disputes with insurance carriers over coverage may affect the timing of cash flows and, if litigation with the carrier becomes necessary, an outcome unfavorable to us may have a material adverse effect on our results of operations.
We are also involved in management and operating activities for the U.S. Government. These activities involve, among other things, handling nuclear devices and their components for the U.S. Government. Most insurable liabilities arising from these sites are not protected in our corporate insurance program. Instead, we rely on government contractual agreements, including a U.S. Government-provided nuclear indemnity (see the below discussion regarding the Price-Anderson Act), some insurance purchased specifically for the sites and certain specialized self-insurance programs funded by the U.S. Government. The U.S. Government has historically fulfilled its contractual agreement to reimburse for insurable claims, and we expect it to continue this process. However, it should be noted that, in most situations, the U.S. Government is contractually obligated to pay subject to the availability of authorized government funds. The reimbursement obligation of the U.S. Government is also conditional, and provisions of the relevant contract or applicable law may preclude reimbursement.
We have a captive insurance company subsidiary that provides us with various insurance coverages. Claims, as a result of our operations, could adversely impact the ability of our captive insurance company subsidiary to respond to all claims presented.
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Although we have product liability insurance coverage, with policy limits that we believe are customary for the medical radioisotope industry, such coverage may not be adequate, requiring that we pay judgments or settlement amounts in excess of policy limits. We may not be able to maintain insurance coverage at adequate levels. Any product liability claims could be costly to defend, time-consuming and result in adverse judgments, which could result in a material adverse effect on our business, reputation and results of operations.
Additionally, 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 providing coverage for, among other things, asbestos and other personal injury claims, to an asbestos personal injury trust. With the contribution of these insurance rights to the asbestos personal injury trust, we may 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. 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.
The loss of, or the inability to attract and retain, qualified personnel could have a material adverse effect on our business.
Our business depends upon the recruitment and continued service of our highly skilled, educated and trained employees. Our ability to attract, motivate, compensate, and retain highly qualified and diverse employees is necessary to support our customers and achieve business objectives. Competition for skilled and diverse employees in our industry can be intense, and any uncertainty surrounding future employment opportunities, facility locations, organizational and reporting structures, acquisitions and divestitures, and related concerns may impair our ability to attract and retain qualified employees. In addition, certain parts of our business, including in the Government Operations segment, involve designs, processing and final products that are classified by the U.S. Government and require applicable personnel to obtain and maintain U.S. Government security clearances. These additional employee qualifications often limit the pool of available candidates and extend the time necessary to recruit and qualify new employees. The loss of the services of qualified employees and any inability to recruit effective replacements or to otherwise attract, motivate, train or retain highly qualified and diverse employees could have a material adverse effect on our business, financial condition and results of operations. Separately, the recent presidential executive order regarding executive salaries and incentive compensation metrics applicable to defense contractors could adversely impact our ability to attract or retain executive talent.
We also have established leadership development and succession planning programs throughout our business. Any significant leadership change and accompanying senior management transition involves inherent risk, and any failure to ensure a smooth transition could hinder our strategic planning, execution and future performance. While we strive to mitigate the negative impact associated with changes to our senior management team, such changes may cause uncertainty among investors, employees, customers, creditors, and others concerning our future direction and performance. If we fail to effectively manage any leadership changes, including organizational and strategic changes, such failure could have a material adverse effect on our ability to successfully attract, motivate and retain highly qualified employees, as well as our business, financial condition and results of operations.
Negotiations with labor unions and possible work stoppages and other labor problems could divert management's attention and disrupt operations. In addition, new collective bargaining agreements or amendments to agreements could increase our labor costs and operating expenses.
A significant number of our employees are members of labor unions. If we are unable to negotiate acceptable new contracts with our unions from time to time, we could experience strikes or other work stoppages by the affected employees. If any such strikes or other work stoppages were to occur, we could experience a significant disruption of operations. In addition, negotiations with unions could divert management's attention. New union contracts or the organization of nonunion employees could result in increased operating costs, as a result of higher wages, higher benefit expenses and other factors, for both union and nonunion employees.
We rely on a limited number of suppliers, including single-source suppliers, which could, under certain circumstances, adversely affect our revenues and operating results.
We rely on a limited number of suppliers, including several single-source suppliers, for materials used in our products in both our Government Operations and Commercial Operations segments. If the supply of a single-sourced or limited-sourced material is delayed or ceases, we may not be able to produce the related product in a timely manner or in sufficient quantities, if at all, which could adversely affect our revenues and operating results. In addition, a single-source or limited-source supplier of
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a key component could potentially exert significant bargaining power over price, quality, warranty claims or other terms relating to these materials, which could have a material adverse effect on our financial condition, results of operations and cash flows.
Maintaining adequate bonding and letter of credit capacity is necessary for us to successfully bid on and win various contracts.
In line with industry practice, we are often required to post standby letters of credit, bank guarantees and surety bonds to support contractual obligations to customers as well as other obligations. These letters of credit, bank guarantees and surety bonds generally indemnify customers should we fail to perform our obligations under the applicable contracts. If a letter of credit, bank guarantee or surety bond is required for a particular project and we are unable to obtain such instrument due to insufficient capacity or other reasons, we will not be able to pursue that project. We utilize surety bond facilities, but, as is typically the case, the issuance of surety bonds under these facilities is at the surety's sole discretion. In addition, we have capacity limits under our credit facility for letters of credit and bank guarantees. Moreover, due to events that affect the insurance and bonding and credit markets generally, surety bonds, letters of credit and bank guarantees may be more difficult to obtain in the future or may only be available at significant additional cost. There can be no assurance that letters of credit, bank guarantees and surety bonds will continue to be available to us on reasonable terms. Our inability to obtain adequate letters of credit, bank guarantees and surety bonds and, as a result, to bid on new work could have a material adverse effect on our business, financial condition and results of operations. As of December 31, 2025, we had $50.0 million in letters of credit and bank guarantees and $363.0 million in surety bonds outstanding.
Our business strategy includes acquisitions and strategic investments to support our growth, which can create certain risks and uncertainties.
We intend to pursue growth through the acquisition of, or strategic investments in, businesses or assets that we believe will enable us to strengthen our existing business and expand into adjacent industries. We may be unable to execute this growth strategy if we cannot identify suitable businesses or assets, reach agreement on potential strategic transactions on acceptable terms or for other reasons.
Acquisitions may be funded by the issuance of additional equity or debt financing, which may not be available on attractive terms. Our ability to secure such financing will depend in part on prevailing capital market conditions, as well as conditions in our business and operating results. Moreover, to the extent an acquisition transaction financed by non-equity consideration results in goodwill, it will reduce our tangible net worth, which may have an adverse effect on potential credit and surety bond capacity.
Additionally, an acquisition may bring us into a business we have not previously conducted and expose us to additional business risks that are different than those we have historically experienced.
Our business strategy also includes development and commercialization of new technologies to support our growth, which requires significant investment and involves various risks and uncertainties. These new technologies may not achieve desired commercial or financial results.
Our future growth will depend on our ability to continue to innovate by developing and commercializing new product and service offerings. Investments in new technologies involve varying degrees of uncertainties and risk. Commercial success depends on many factors, including the levels of innovation, the development costs and the availability of capital resources to fund those costs, the levels of competition from others developing similar or other competing technologies, our ability to obtain or maintain government permits or certifications, the effectiveness of production, distribution and marketing efforts, market demand, market growth or shrinkage, market acceptance and the costs to customers to deploy and provide support for the new technologies. We may not achieve significant revenue from new product and service investments for a number of years, if at all. Additionally, there can be no assurance that the current technologies that our business relies upon will remain competitive, or that competing technologies will not disrupt our business. Moreover, new products and services may not be profitable, and, even if they are profitable, our operating margins from new products and services may not be as high as the margins we have experienced historically. Lastly, new technologies may not be patentable and, as a result, we may face increased competition.
Among our opportunities involving new technologies, we are developing new medical radioisotope technology. The costs to develop and commercialize this technology require a substantial amount of investment over a period of years, and commercialization of this technology also requires authorizations from government agencies, including the U.S. Food and Drug Administration ("FDA"), Health Canada and the CNSC. There can be no assurance that we will be successful in addressing all of the technological challenges to developing and commercializing this technology or in obtaining the required authorizations
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from the FDA, Health Canada or the CNSC. In addition, commercialization of the medical radioisotope technology could subject us to product liability claims. The potential also exists for competitors to emerge with alternative technologies. We can provide no assurance that those competitors will not develop and commercialize similar or superior technologies sooner than we can or at a significant cost or price advantage.
Additionally, the Company's competitors may adopt new technologies and technological advancements using artificial intelligence and machine learning to pursue new products and approaches more quickly, successfully and effectively than the Company. We may be unable to successfully integrate the technology into our internal business processes and product and service offerings in a timely, cost-effective manner and may become less competitive as a result.
We conduct a portion of our operations through joint venture entities, over which we may have limited ability to influence.
We currently have equity interests in several joint ventures and may enter into additional joint venture arrangements in the future. Our influence over some of these entities may be limited. Even in those joint ventures over which we do exercise significant influence, we are often required to consider the interests of our joint venture partners in connection with major decisions concerning the operations of the joint ventures. In any case, differences in views among the joint venture participants may result in delayed decisions or disputes. We also cannot control the actions of our joint venture partners. We sometimes have joint and several liabilities with our joint venture partners under the applicable contracts for joint venture projects and we cannot be certain that our partners will be able to satisfy any potential liability that could arise. These factors could potentially harm the business and operations of a joint venture and, in turn, our business and operations.
Operating through joint ventures in which we are minority holders results in us having limited control over many decisions made with respect to projects and internal controls relating to projects. These joint ventures may not be subject to the same requirements regarding internal controls and internal control over financial reporting that we follow. As a result, internal control problems may arise with respect to the joint ventures that could adversely affect our ability to respond to requests or contractual obligations to customers or to meet the internal control requirements to which we are otherwise subject.
In addition, our arrangements involving joint ventures may restrict us from gaining access to the cash flows or assets of these entities. In some cases, our joint ventures have governmentally imposed restrictions on their abilities to transfer funds to us.
If our co-venturers fail to perform their contractual obligations on a project or if we fail to coordinate effectively with our co-venturers, we could be exposed to legal liability, loss of reputation and reduced profit on the project.
We often perform projects jointly with third parties. For example, we enter into contractual arrangements to bid for and perform jointly on large projects. Success on these joint projects depends in part on whether our co-venturers fulfill their contractual obligations satisfactorily. If any one or more of these third parties fail to perform their contractual obligations satisfactorily, we may be required to make additional investments and provide added services in order to compensate for that failure. If we are unable to adequately address any such performance issues, then our customer may exercise its right to terminate a joint project, exposing us to legal liability, loss of reputation and reduced profit.
Under these arrangements, participating parties may disagree on business decisions and strategies. These disagreements could result in delays, additional costs and risks of litigation. Our inability to successfully maintain existing relationships or enter into new agreements could have a material adverse effect on our results of operations.
Accounting and Financial Reporting Risks
We recognize a large portion of our revenue on an over time basis which could result in volatility in our results of operations.
We generally recognize revenues and profits under our long-term contracts on an over time basis. Accordingly, we review contract price and cost estimates regularly as the work progresses and reflect adjustments proportionate to our progress made towards completion in income in the period when we revise those estimates. To the extent these adjustments result in a reduction or an elimination of previously reported profits with respect to a project, we would recognize a charge against current earnings, which could be material. Our current estimates of our contract costs and the profitability of our long-term projects, although reasonably reliable when made, could change as a result of the uncertainties associated with these types of contracts, and if adjustments to overall contract costs are significant, the reductions or reversals of previously recorded revenue and profits could be material in future periods.
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Our backlog is subject to unexpected adjustments and cancellations and may not be a reliable indicator of future revenues or earnings.
There can be no assurance that the revenues projected in our backlog will be realized or, if realized, will result in profits. Because of project cancellations or changes in project scope and schedule, we cannot predict with certainty when or if backlog will be performed. In addition, even where a project proceeds as scheduled, it is possible that contracted parties may default and fail to pay amounts owed to us or poor project performance could increase the cost associated with a project. Delays, suspensions, cancellations, payment defaults, scope changes and poor project execution could materially reduce or eliminate the revenues and profits that we actually realize from projects in backlog.
Reductions in our backlog due to cancellation or modification by a customer or for other reasons may adversely affect, potentially to a material extent, the revenues and earnings we actually receive from contracts included in our backlog. Many of the contracts in our backlog provide for cancellation fees in the event customers cancel projects. These cancellation fees usually provide for reimbursement of our out-of-pocket costs, revenues for work performed prior to cancellation and a varying percentage of the profits we would have realized had the contract been completed. However, we typically have no contractual right upon cancellation to the total revenues reflected in our backlog. Projects may remain in our backlog for extended periods of time. If we experience significant project terminations, suspensions or scope adjustments to contracts reflected in our backlog, our financial condition, results of operations and cash flows may be adversely impacted.
Pension and medical expenses associated with our retirement benefit plans may fluctuate significantly depending on changes in actuarial assumptions, future market performance of plan assets, future trends in health care costs and legislative or other regulatory actions.
A substantial portion of our current and retired employee population is covered by pension and postretirement benefit plans, the costs and funding requirements of which depend on our various assumptions, including estimates of rates of return on benefit-related assets, discount rates for future payment obligations, rates of future cost growth, mortality assumptions and trends for future costs. Variances from these estimates could have a material adverse effect on us. In addition, our policy to recognize these variances annually through mark to market accounting could result in volatility in our results of operations, which could be material. Service accruals for salaried participants ceased as of December 31, 2015. As of December 31, 2025, we had underfunded defined benefit pension and postretirement benefit plans with obligations totaling approximately $153.3 million. A substantial portion of our postretirement benefit plan costs are recoverable on our U.S. Government contracts. See Note 7 to our consolidated financial statements included in this Report for additional information regarding our pension and postretirement benefit plan obligations.
Legal, Regulatory and Compliance Risks
We are involved in a number of legal proceedings. We cannot predict the outcome of litigation and other contingencies with certainty.
Our business may be adversely affected by the outcome of legal proceedings, investigations, disputes and other contingencies that cannot be predicted with certainty. As required by GAAP, we estimate loss contingencies and establish reserves based on our assessment of contingencies where liability is deemed probable and reasonably estimable in light of the facts and circumstances known to us at a particular point in time. Subsequent developments in legal proceedings may affect our assessment and estimates of the loss contingency recorded as a liability or as a reserve against assets in our financial statements. For a description of current legal proceedings, see Note 10 to our consolidated financial statements included in this Report.
If we fail to comply with government procurement laws and regulations, we could lose business and be liable for various penalties or sanctions.
We must comply with laws and regulations relating to the formation, administration, and performance of U.S. Government contracts. These laws and regulations include the FAR, the Defense FAR Supplement ("DFARS"), the Truthful Cost or Pricing Data Act, the CAS national security laws, regulations, and orders restricting the use and dissemination of classified information, and U.S. export control laws governing the export of certain products and technical information. Certain government contracts provide audit rights by government agencies, including with respect to performance, costs, internal controls and compliance with applicable laws and regulations. In complying with these laws and regulations, we may incur significant costs, and non-compliance may result in the imposition of fines and penalties, including contractual damages. If we fail to comply with existing or future laws and regulations or if a government audit, review, or investigation uncovers improper or illegal activities, we may be subject to civil penalties, criminal penalties, or administrative sanctions, including suspension or debarment from contracting with the U.S. Government. Changes in environmental and climate change laws or regulations, including laws relating to greenhouse gas emissions, could lead to new or additional investment in facilities and could increase
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environmental compliance expenditures, including increased energy, raw material and other costs. If we are unable to comply with any such regulatory changes, it could have a material adverse effect on our business, financial condition and results of operations. Further, our reputation could suffer harm if allegations of impropriety were made or found against us, which could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.
In addition, the President recently issued Executive Order ("EO") 14372 that could limit certain contractors performing work under critical defense weapons, supplies, and equipment contracts from issuing dividends or distributions, share repurchases, increasing executive salaries, and using particular metrics to determine executive incentive compensation. While there remains uncertainty as to how EO 14372 will be interpreted and implemented, it is expected that EO 14372 will be implemented this year through a new DFARS clause and related contract provisions and that the EO's restrictions on dividends, distributions, share repurchases, executive salaries and foreign sales programs will, in some cases, be imposed only after the DoW determines that a contractor has failed to meet identified contract performance requirements.
Employee, agent or partner misconduct or our overall failure to comply with laws, regulations or government contracts could weaken our ability to win contracts, lead to the suspension of our operations and result in reduced revenues and profits.
Misconduct, fraud, or other improper activities by one or more of our employees, agents or partners, as well as our failure to comply with applicable laws and regulations, could have a significant negative impact on our business and reputation. Such misconduct could include the failure to comply with government procurement regulations, regulations regarding the protection of classified and other information, regulations regarding the pricing of labor and other costs in government contracts, regulations on lobbying or similar activities, regulations pertaining to the internal controls over financial reporting and various other applicable laws or regulations. For example, we regularly provide services that may be highly sensitive or that are related to critical national security matters. If a security breach were to occur, our ability to procure future government contracts could be severely limited. The precautions we take to prevent and detect these activities may not be effective, and we could face unknown risks or losses. Further, incorporating artificial intelligence could give rise to litigation risk and risk of non-compliance and unknown cost of compliance, as artificial intelligence is an emerging technology for which the legal and regulatory landscape is not fully developed (including potential liability for breaching intellectual property or privacy rights or laws). While new artificial intelligence initiatives, laws, and regulations are emerging and evolving, what they ultimately will look like remains uncertain, and our obligation to comply with them could entail significant costs, negatively affect our business, or entirely limit our ability to incorporate certain artificial intelligence capabilities into our offerings.
We are routinely audited and reviewed by the U.S. Government and its agencies. These agencies review our performance under our contracts, our cost structure and our compliance with applicable laws, regulations and standards, as well as the adequacy of, and our compliance with, our internal control systems and policies. Systems that are subject to review include our purchasing systems, billing systems, property management and control systems, cost estimating systems, compensation systems and management information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed or must be refunded if already reimbursed. If an audit or review uncovers improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines, loss of security clearance and suspension or debarment from contracting with the U.S. Government. In addition, we could suffer serious reputational harm if allegations of impropriety were made against us.
Our nuclear operations subject us to various environmental, regulatory, financial and other risks.
Our operations in designing, engineering, manufacturing, supplying, constructing and maintaining nuclear fuel and nuclear power equipment and components subject us to various risks, including:
•potential liabilities relating to harmful effects on the environment and human health resulting from nuclear operations and the storage, handling and disposal of radioactive materials;
•unplanned expenditures relating to maintenance, operation, security, defects, upgrades and repairs required by the NRC, the CNSC and other government agencies;
•limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with nuclear operations; and
•potential liabilities arising out of a nuclear, radiological or criticality incident, whether or not it is within our control.
Our nuclear operations are subject to various safety and quality-related requirements, and occupational radiation protection requirements, imposed by the U.S. Government, the DOE, the NRC and the CNSC. In the event of non-compliance, these agencies might increase regulatory oversight, impose fines or shut down our operations, depending upon the assessment
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of the severity of the situation. Non-compliance may also impact our competitive position when seeking future contracts. Revised security and safety requirements promulgated by these agencies could necessitate substantial capital and other expenditures. In addition, we must comply with and are affected by laws and regulations relating to the award, administration and performance of U.S. Government contracts. U.S. Government contract laws and regulations affect how we do business with our customers and, in some instances, impose added costs on our business. A violation of specific laws and regulations could result in the imposition of fines and penalties or the termination of our contracts or debarment from bidding on contracts.
Limitations or modifications to indemnification regulations of the U.S. or foreign countries could adversely affect our business.
The Price-Anderson Act partially indemnifies the nuclear industry against liability arising from nuclear incidents in the U.S., while ensuring compensation for the general public. The Price-Anderson Act comprehensively regulates the manufacture, use and storage of radioactive materials, while promoting the nuclear industry by offering broad indemnification to commercial nuclear power plant operators and DOE contractors. Because we provide nuclear fabrication and other services to the DOE relating to its nuclear devices, facilities and other programs and the nuclear power industry in the ongoing maintenance and modifications of its nuclear power plants, including the manufacture of equipment and other components for use in such nuclear power plants, we expect, in the event of a nuclear incident or precautionary evacuation (as such terms are defined in the Atomic Energy Act), to be entitled to the indemnification protections under the Price-Anderson Act against liability arising from nuclear incidents occurring in the U.S., with an available indemnification amount, for our DOE contracts, of approximately $16.5 billion (for nuclear incidents or precautionary evacuations occurring within the US) and of $2 billion (for nuclear incidents or precautionary evacuations occurring in foreign countries). The statutory authority for indemnification under the Price-Anderson Act has been extended by Congress five times, most recently through December 2065 by Section 107 to the Further Consolidated Appropriations Action, 2024 (Public Law 118-47, March 23, 2024).
We also provide nuclear fabrication and other services to the nuclear power industry in Canada and other countries. Canada's NLCA generally conforms to international conventions and is conceptually similar to the Price-Anderson Act in the U.S. Accordingly, indemnification protections and the possibility of exclusions under Canada's NLCA are similar to those under the Price-Anderson Act in the U.S.
The Price-Anderson Act and Canada's NLCA indemnification provisions may not apply to all liabilities that we might incur while performing services as a contractor for the DOE and the nuclear power industry. If an incident, damages or evacuation is not covered under the indemnification provisions of the Price-Anderson Act or Canada's NLCA, we could be held liable for damages, in some cases regardless of fault, which could have an adverse effect on our financial condition and results of operations. In connection with the international transportation of toxic, hazardous and radioactive materials, it is possible for a claim to be asserted that may not fall within the indemnification provided by the Price-Anderson Act or Canada's NLCA. If such indemnification authority is not applicable in the future, our business could be adversely affected if the owners and operators of nuclear power plants fail to retain our services in the absence of commercially adequate insurance and indemnification.
Moreover, because we manufacture nuclear components for the U.S. Government's defense program, we may be entitled to some of the indemnification protections afforded by Public Law 85-804 for certain of our nuclear and hazardous operations risks. Public Law 85-804 authorizes certain agencies of the U.S. Government, such as the DOE and the DoW, to indemnify their contractors against unusually hazardous or nuclear risks when such action would facilitate the national defense. However, because the indemnification protections afforded by Public Law 85-804 are granted on a discretionary basis, situations could arise where the U.S. Government elects not to offer such protections. In such situations, our business could be adversely affected by either our inability to obtain commercially adequate insurance or indemnification or our refusal to pursue such operations in the absence of such protections.
Our operations involve the handling, transportation and disposal of radioactive and hazardous materials, and environmental laws and regulations and civil liability for contamination of the environment or related personal injuries may result in increases in our operating costs and capital expenditures and decreases in our earnings and cash flows.
Our operations involve the handling, transportation and disposal of radioactive and hazardous materials, including nuclear devices and their components. Failure to properly handle these materials could pose a health risk to humans or wildlife and could cause personal injury and property damage (including environmental contamination). If an accident were to occur, its severity could be significantly affected by the volume of the materials and the speed of corrective action taken by us and others, including emergency response personnel, as well as other factors beyond our control, such as weather and wind conditions. Actions taken in response to an accident could result in significant costs.
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Governmental requirements relating to the protection of the environment, including solid waste management, air quality, water quality, the decontamination and decommissioning of nuclear manufacturing and processing facilities and cleanup of contaminated sites, have had a substantial impact on our operations. These requirements are complex and subject to frequent change. In some cases, they can impose liability for the entire cost of cleanup on any responsible party without regard to negligence or fault and impose liability on us for the conduct of others or conditions others have caused, or for our acts that complied with all applicable requirements when we performed them. Our compliance with amended, new or more stringent requirements, stricter interpretations of existing requirements or the future discovery of contamination may require us to make material expenditures or subject us to liabilities that we currently do not anticipate. Such expenditures and liabilities may adversely affect our business, financial condition, results of operations and cash flows. In addition, some of our operations and the operations of predecessor owners of some of our properties have exposed us to civil claims by third parties for liability resulting from alleged contamination of the environment or personal injuries caused by releases of hazardous substances into the environment. See the heading "Governmental Regulations and Environmental Matters" in Item 1 of this Report.
In our contracts, we seek to protect ourselves from liability associated with accidents, but there can be no assurance that such contractual limitations on liability will be effective in all cases or that our or our customers' insurance will cover all the liabilities we have assumed under those contracts. The costs of defending against a claim arising out of a nuclear incident or precautionary evacuation, and any damages awarded as a result of such a claim, could adversely affect our financial condition and results of operations.
We maintain insurance coverage as part of our overall risk management strategy and due to requirements to maintain specific coverage in our financing agreements and in many of our contracts. These policies do not protect us against all liabilities associated with accidents or for unrelated claims. In addition, comparable insurance may not continue to be available to us in the future at acceptable prices, or at all.
Our business requires us to obtain, and to comply with, federal, state and local government permits and approvals.
Our business is required to obtain, and to comply with, federal, state and local government permits and approvals. Any of these permits or approvals may be subject to denial, revocation or modification under various circumstances. Failure to obtain or comply with the conditions of permits or approvals may adversely affect our operations by temporarily suspending our activities or curtailing our work and may subject us to penalties and other sanctions. Although existing licenses are routinely renewed by various regulators, renewal could be denied or jeopardized by various factors, including:
•failure to provide adequate financial assurance for decommissioning or closure;
•failure to comply with environmental and safety laws and regulations or permit conditions;
•local community, political or other opposition;
•executive action; and
•legislative action.
We are also subject to regulatory oversight by the FDA and Health Canada for our medical isotope business. The commercialization of our medical radioisotope technology will require the review and approval of these and other government agencies. Any delay or denial of such approvals could have a material adverse effect on our medical isotope business.
In addition, if new legislation, regulations or presidential executive orders are enacted or implemented, or if existing laws, regulations or presidential executive orders are amended or are interpreted or enforced differently, we may be required to obtain additional operating permits or approvals. Our inability to obtain, and to comply with, the permits and approvals required for our business could have a material adverse effect on us.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
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Item 1C. CYBERSECURITY
We seek to provide a secure working environment by establishing and maintaining effective security measures to protect the Company’s employees, properties, technology and our customers’ assets from potential threats, including cybersecurity threats. Accordingly, we have implemented numerous controls, technologies and processes and have integrated operational measures into our overall risk management system to assess, identify and manage material risks from internal and external cybersecurity threats.
The Governance Committee of our Board of Directors oversees the Company’s guidelines, policies and processes to assess and manage the Company’s exposure to risks, which include cybersecurity risks. The Governance Committee meets periodically with management to review and discuss major financial risk exposures, including from cybersecurity threats, and the steps management has taken to monitor and control those exposures. As necessary, our Cybersecurity Incident Management Team ("CIMT") (described below) reports significant cybersecurity threats and incidents to the Governance Committee. The Governance Committee is also periodically briefed by management, including our Chief Digital Officer ("CDO") , with respect to our cybersecurity posture to facilitate its role in overseeing the Company’s overall cybersecurity program.
The CIMT is responsible for coordinating the containment, response, investigation, reporting and recovery related to a cybersecurity incident, and is an internally led management team made up of leaders from our Communications, Human Resources, IT and Cybersecurity, Legal and Compliance, Risk Management and other departments, including our IT Director, Cyber Security. Team members possess a broad scope of expertise, including cybersecurity, information technology, legal, compliance, risk management, insurance and crisis communications. The CIMT operates under the co-leadership of the General Counsel and CDO, who are responsible for oversight and composition of the CIMT, determining whether an incident warrants activating external service providers, providing updates to the Chief Executive Officer and senior management team, keeping our Governance Committee as well as our Board of Directors informed as appropriate, and ultimately establishing and executing our enterprise-wide incident response strategy.
Training and preparation are essential to the overall success of the CIMT to help ensure team members develop and maintain the operational, technical and managerial skillsets necessary to support the effective function of the CIMT. Our CIMT members undergo training and preparation for cybersecurity incidents like participating in regular cybersecurity incident response tabletop exercises and reviewing lessons learned. Our general cybersecurity team receives extensive on-the-job training with respect to cybersecurity operations, maintenance, analysis, detection, investigation, mitigation and protection. In addition, company-wide cybersecurity and insider threat training is mandated for our employees.
We have processes and controls that oversee, identify and manage cybersecurity risks with respect to our external service providers , including cybersecurity service providers. For example, we review and seek to negotiate terms and conditions in our legal agreements to provide for the adequate protection of confidential information and the Company’s networks and systems and compliance with any applicable cybersecurity requirements, including with respect to any information exchanged. We also review the security controls of hosted solutions in an effort to ensure protection is commensurate with our security requirements. We periodically revalidate those cybersecurity control reviews commensurate with the risk identified. Further, we utilize an external security assessment service to produce security ratings that include detailed descriptions of deficiencies affecting the rating. We seek to respond accordingly to those deficiencies to the extent practicable. Lastly, as appropriate and when feasible, we may visit our service providers’ facilities to observe security practices and physical security controls.
Despite taking extensive precautions, cybersecurity incidents are still possible. In general, when our cybersecurity team detects a cybersecurity threat by way of an alert within our cyber defense systems, employee notice, or otherwise, our IT Director, Cyber Security, along with other relevant personnel, is promptly apprised of the situation, and actively takes steps to prevent, mitigate, or remediate that threat. If a cybersecurity threat appears to progress into a possible cybersecurity incident, our IT Director, Cyber Security serves as the CIMT’s incident manager and the CDO or designee notifies the Chief Risk Officer of a need to activate the CIMT as appropriate, informs and updates the CIMT and may consult other internal and
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external resources with the required technical, application, organizational and business knowledge to provide effective advice to the CIMT.
The CIMT responds to potential cybersecurity incidents raised to its attention by making an assessment of the event to determine if a cybersecurity incident has, in fact, occurred, identifying any assets impacted by the incident, determining any information stored and processed by assets identified as compromised, assessing the nature and level of damage that has occurred (accessed, exfiltrated, released to the public, etc.) and revising the assessment throughout the incident response process when additional details are identified.
As a U.S. Government contractor, we may be prone to a greater number of cybersecurity threats than companies in other industries. As of the date of this Report, risks from cybersecurity threats, including as a result of previous cybersecurity incidents, have not materially affected us, including our business strategy, results of operations or financial condition during the prior three fiscal years. However, there can be no guarantee that cybersecurity threats and incidents will not materially affect us in the future. See Item 1A of this Report for more information on our cybersecurity risks.
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Item 2. PROPERTIES
The following table provides the segment name, location and general use of each of our principal properties at December 31, 2025 that we own or lease:
| Business Segment and Location | Principal Use | Owned/Leased (Lease Expiration) | ||||||||||||
| Government Operations | ||||||||||||||
| Lynchburg, Virginia | Manufacturing facility (1) (4) | Owned | ||||||||||||
| Barberton, Ohio | Manufacturing facility | Owned | ||||||||||||
| Euclid, Ohio | Manufacturing facility | Owned | ||||||||||||
| Mount Vernon, Indiana | Manufacturing facility | Owned | ||||||||||||
| Erwin, Tennessee | Manufacturing facility (2) (4) | Owned | ||||||||||||
| Jonesborough, Tennessee | Manufacturing facility | Owned | ||||||||||||
| Commercial Operations | ||||||||||||||
| Cambridge, Ontario, Canada | Manufacturing facility | Owned | ||||||||||||
| Peterborough, Ontario, Canada | Manufacturing facility (3) (4) | Leased (2036) | ||||||||||||
| Toronto, Ontario, Canada | Manufacturing facility (3) (4) | Leased (2036) | ||||||||||||
| Kanata, Ontario, Canada | Manufacturing facility (3) (4) | Leased (2038) | ||||||||||||
| Vancouver, British Columbia, Canada | Manufacturing facility (3) (4) | Leased (2031) | ||||||||||||
| Oakville, Ontario, Canada | Manufacturing facility | Leased (2029) | ||||||||||||
| Kitchener, Ontario, Canada | Manufacturing facility | Leased (2034) | ||||||||||||
| Etobicoke, Ontario, Canada | Manufacturing facility (3) (4) | Owned | ||||||||||||
| Corporate | ||||||||||||||
| Lynchburg, Virginia | Administrative office | Leased (2026) | ||||||||||||
| Washington, District of Columbia | Administrative office | Leased (2033) | ||||||||||||
| Charlotte, North Carolina | Administrative office | Leased (2028) | ||||||||||||
| McLean, Virginia | Administrative office | Leased (2035) | ||||||||||||
(1)Our Government Operations segment operates two facilities in Lynchburg, Virginia:
•The segment's primary manufacturing plant which resides on 497 acres and has approximately 1 million square feet under roof. This facility is the nation's largest commercial high-enriched uranium processing facility and is also the largest commercial International Atomic Energy Agency certified facility in the U.S.
•A center for manufacturing and research and development, referred to as the BWXT Innovation Campus. This site is adjacent to the facility noted above.
(2)Nuclear Fuel Services, Inc. ("NFS") operates this facility, which manufactures fuel for naval nuclear reactors and downblends Cold War-era government stockpiles of high-enriched uranium. NFS is the sole provider of nuclear fuel for the U.S. Navy.
(3)These facilities are licensed by the CNSC in order to allow us to fabricate natural uranium fuel and produce medical radioisotopes.
(4)These facilities are subject to review by either the NRC or the CNSC for licensee performance. The performance reviews determine the safe and secure conduct of operations of the facility.
We consider each of our significant properties to be suitable and adequate for its intended use. For further details regarding our properties, see Item 1 of this Report.
Item 3. LEGAL PROCEEDINGS
The information set forth under the heading "Investigations and Litigation" in Note 10 to our consolidated financial statements included in Item 8 of this Report is incorporated by reference into this Item 3.
Item 4. MINE SAFETY DISCLOSURES
None.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is traded on the New York Stock Exchange under the symbol BWXT. As of February 19, 2026, there were approximately 1,236 holders of record of our common stock.
Since November 2012, we have periodically announced that our Board of Directors has authorized share repurchase programs. The following table provides information on our purchases of equity securities during the quarter ended December 31, 2025. Any shares purchased that were not part of a publicly announced plan or program are related to repurchases of common stock pursuant to the provisions of employee benefit plans that permit the repurchase of shares to satisfy statutory tax withholding obligations.
Issuer Purchases of Equity Securities
| Period | Total number of shares purchased (1) | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Approximate dollar value of shares that may yet be purchased under the plans or programs (in millions) (2) | ||||||||||||||||||||||
| October 1, 2025 – October 31, 2025 | 719 | $ | 200.14 | — | $ | 347.6 | ||||||||||||||||||||
| November 1, 2025 – November 30, 2025 | 377 | $ | 213.78 | — | $ | 347.6 | ||||||||||||||||||||
| December 1, 2025 – December 31, 2025 | 238 | $ | 180.68 | — | $ | 347.6 | ||||||||||||||||||||
| Total | 1,334 | $ | 200.52 | — | ||||||||||||||||||||||
(1)Includes 719, 377 and 238 shares repurchased during October, November and December, respectively, pursuant to the provisions of employee benefit plans that permit the repurchase of shares to satisfy statutory tax withholding obligations.
(2)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.
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The following graph provides a comparison of our cumulative total shareholder return over five years to the return of the S&P 500 Composite Index ("S&P 500") and the return of the S&P Aerospace and Defense Select Index ("S&P A&D Select"). The following graph shall not be deemed to be "soliciting material" or "filed" with the SEC or be subject to Regulation 14A or 14C (other than as provided in Item 201 of Regulation S-K) or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that BWXT specifically incorporates it by reference into such filing.
This graph assumes the investment of $100 on December 31, 2020 and the reinvestment of dividends thereafter.
Item 6. [RESERVED]
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements we make in the following discussion, which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the heading "Cautionary Statement Concerning Forward-Looking Statements" in Item 1 and throughout Item 1A of this Report.
General
We are a leading supplier of nuclear components and fuel to the U.S. Government; provide technical, management and site services to support governments in the operation of complex facilities and environmental remediation activities; supply precision manufactured components, nuclear fuel and services for the commercial nuclear power industry; supply critical medical radioisotopes and radiopharmaceuticals; and develop nuclear technologies for a variety of applications, including medical radioisotopes, advanced nuclear power sources and advanced nuclear reactors. In general, we operate in capital-intensive industries and rely on large contracts for a substantial amount of our revenues. We operate in two reportable segments: Government Operations and Commercial Operations. We are currently exploring growth strategies across our segments through strategic investments and acquisitions to expand and complement our existing businesses. We would expect to fund these opportunities with cash generated from operations or by raising additional capital through debt, equity or some combination thereof.
Outlook
We expect to recognize approximately 40% of the revenue associated with our backlog by the end of 2026, with the remainder to be recognized thereafter.
Government Operations
The revenues of our Government Operations segment are largely a function of national security spending by the U.S. Government. As a supplier of major nuclear components for certain U.S. Government programs, we are a significant participant in the defense industry and have not been negatively impacted by federal budget reductions to date. We believe many of our programs are well-aligned with national defense and other strategic priorities as we supply high-end equipment for submarines and aircraft carriers for the U.S. Navy and participate in the continuing cleanup, operation and management of critical government-owned nuclear sites, laboratories and manufacturing complexes maintained by the DOE, NASA and other federal agencies. However, it is possible that reductions in federal government spending could have an adverse impact on the operating results and cash flows of this segment in the future.
A portion of this segment's operations is also conducted through joint ventures, which typically earn fees, and we account for them following the equity method of accounting. See Note 4 to our consolidated financial statements included in this Report for financial information on our equity method investments. This segment also specializes in the development of advanced technologies. The nature, timing and duration of any related contracts are dependent on the demand and funding availability for such technologies.
Commercial Operations
The revenues in this segment primarily depend on the demand and competitiveness of nuclear energy. The activity of this segment depends on the timing of maintenance and refueling outages, the cyclical nature of capital expenditures and major refurbishment and plant life extension projects, as well as the demand for nuclear fuel and fuel handling equipment primarily in the Canadian market, which could cause variability in our financial results.
Our Commercial Operations segment's offerings also include medical radioisotope products, radiopharmaceuticals and medical devices for use in diagnostic imaging and radiotherapeutic treatments. The medical isotope business will be the platform from which we plan to launch our Molybdenum-99 product line and a number of future radioisotope-based imaging, diagnostic and therapeutic products.
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Critical Accounting Estimates
Our financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe the following are our most critical accounting policies that we apply in the preparation of our financial statements. These policies require our most difficult, subjective and complex judgments, often as a result of the need to make estimates of matters that are inherently uncertain, and the impact of these policies have had or are reasonably likely to have a material impact on our financial condition or results of operations.
See Note 1 to our consolidated financial statements included in this Report for further discussion of significant accounting policies.
Contracts and Revenue Recognition
We generally recognize contract revenue and resulting income over time based on the measurement of the extent of progress toward completion using total costs incurred as a percentage of the total estimated project costs for individual performance obligations. 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. If a current estimate of total contract costs indicates a loss on a contract, the projected loss is recognized in full when determined. It is possible that current estimates could materially change for various reasons, including, but not limited to, fluctuations in forecasted labor productivity or raw material prices. We routinely review estimates related to our contracts, and revisions to profitability are reflected in the quarterly and annual earnings we report. The aggregate impact of changes in estimates increased our revenue and operating income as follows:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | 5,544 | $ | 37,908 | $ | 24,728 | ||||||||||||||
Operating Income (1) | $ | 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.
During the year ended December 31, 2023, our Government Operations segment results were favorably impacted by contract adjustments related to a nuclear 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.
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. Depending on the nature of the modification, we consider whether to account for the modification as an adjustment to the existing contract or as a separate contract. Modifications to our contracts are generally accounted for as if they were part of the existing contract as these modifications are not distinct from the existing contract and accounted for as a cumulative adjustment to revenue.
Although we continually strive to improve our ability to estimate our contract costs and profitability, adjustments to overall contract costs due to unforeseen events could be significant in future periods. We recognize contract change orders or changes in scope of work in contract revenues, to the extent of costs incurred, when we believe collection is probable and can be reasonably estimated. We recognize income from claims when formally agreed with the customer. We regularly assess the collectability of contract revenues and receivables from customers.
Pension Plans and Postretirement Benefits
We utilize actuarial and other assumptions in calculating the cost and benefit obligations of our pension and postretirement benefits. The assumptions utilized in the determination of our cost and obligations include assumptions
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regarding discount rates, expected returns on plan assets, mortality and health care cost trends. The assumptions utilized represent our best estimates based on historical experience and other factors.
We calculate the majority of our pension costs under both financial accounting standards ("FAS") in accordance with GAAP and CAS in accordance with the FAR. We have prepared our consolidated financial statements and segment reporting disclosures utilizing pension costs calculated under FAS. Pension costs calculated under CAS are utilized as the basis for recovery of pension costs on our U.S. Government contracts. For the years ended December 31, 2025, 2024 and 2023, our CAS pension costs attributed to U.S. Government contracts totaled $32.2 million, $20.5 million and $13.6 million, respectively. The amount of recoverable CAS pension costs recognized as revenue on an annual basis may differ from the amounts noted above. See further discussion of our accounting for contracts and revenue recognition above and in Note 1 to our consolidated financial statements included in this Report.
Actual experience that differs from these assumptions or future changes in assumptions will affect our recognized benefit obligations and related costs. We immediately recognize net actuarial gains and losses in earnings in the fourth quarter as a component of net periodic benefit cost. Net actuarial gains and losses occur when actual experience differs from any of the various assumptions used to value our pension and postretirement benefit plans or when assumptions, which are revisited annually through our update of our actuarial valuations, change due to current market conditions or underlying demographic changes. The primary factors contributing to net actuarial gains and losses are changes in the discount rate used to value the obligations as of the measurement date each year and the difference between the actual return on plan assets and the expected return on plan assets. The effect of changes in the discount rate and expected rate of return on plan assets assumptions in combination with the actual return on plan assets can result in significant changes in our estimated pension and postretirement benefit cost and our consolidated financial condition.
The following sensitivity analysis shows the impact of a 25 basis point change in the assumed discount rate and return on plan assets on our FAS pension benefit plan obligations and expense for the year ended December 31, 2025:
| .25% Increase | .25% Decrease | |||||||||||||
| (In millions) | ||||||||||||||
| Discount Rate: | ||||||||||||||
| Effect on projected benefit obligation | $ | (40.2) | $ | 42.3 | ||||||||||
| Return on Plan Assets: | ||||||||||||||
| Effect on ongoing net periodic benefit cost | $ | (9.1) | $ | 7.2 | ||||||||||
(1)Excludes effect of annual mark to market adjustment.
Goodwill and Intangible Assets
Each year, we evaluate goodwill at each reporting unit to assess recoverability, and impairments, if any, are recognized in earnings. We perform a qualitative analysis when we believe that there is sufficient excess fair value over carrying value based on our most recent quantitative assessment, adjusted for relevant facts and circumstances that could affect fair value. Deterioration in macroeconomic, industry and market conditions, cost factors, overall financial performance, share price decline or entity and reporting unit specific events could cause us to believe a qualitative test is no longer appropriate.
When we determine that it is appropriate to test goodwill for impairment utilizing a quantitative test, we compare the fair value of a reporting unit to its carrying amount, including goodwill. We utilize both the income and market valuation approaches to provide inputs into the estimate of the fair value of our reporting units, which would be considered by market participants.
Under the income valuation approach, we employ a discounted cash flow model to estimate the fair value of each reporting unit. This model requires the use of significant estimates and assumptions regarding future revenues, costs, margins, capital expenditures, changes in working capital, terminal year growth rate and cost of capital. Our cash flow models are based on our forecasted results for the applicable reporting units. Actual results could differ materially from our projections. Some assumptions, such as future revenues, costs and changes in working capital are company driven and could be affected by a loss of one or more significant contracts or customers, failure to control costs on certain contracts, a decline in U.S. Government funding or a decline in demand based on changing economic or regulatory conditions. Changes in external market conditions may affect certain other assumptions, such as the cost of capital. Market conditions can be volatile and are outside of our control.
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Under the market valuation approach, we employ the guideline publicly traded company method, which indicates the fair value of the equity of each reporting unit by comparing it to publicly traded companies in similar lines of business. After identifying and selecting guideline companies, we analyze their business and financial profiles for relative similarity. Factors such as size, growth, risk and profitability are analyzed and compared to each of our reporting units. Assumptions include the selection of our peer companies and use of market multiples, which could increase or decrease based on the profitability of our competitors and performance of their stock, which is often dependent on the performance of the stock market and general economy as a whole.
Adverse changes in the assumptions utilized in our impairment test could cause a reduction or elimination of excess fair value over carrying value, resulting in potential recognition of impairment. If the carrying value of a reporting unit exceeds its fair value, an impairment charge is recorded to goodwill in the amount by which the carrying value exceeds fair value.
We completed our annual review of goodwill for each of our reporting units for the year ended December 31, 2025, which indicated that we had no impairment of goodwill. The fair value of our reporting units was substantially in excess of carrying value.
Each year, we evaluate indefinite-lived intangible assets to assess recoverability, and impairments, if any, are recognized in earnings. We perform a qualitative assessment when testing indefinite-lived intangible assets for impairment to determine whether events or circumstances that could affect the significant inputs used in determining fair value have occurred that indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. Deterioration in macroeconomic, industry and market conditions, cost factors or overall financial performance could cause us to believe a qualitative test is no longer appropriate. When quantitative assessments are performed, we primarily utilize income-based valuation approaches. Under the income-based valuation approach, we employ a relief from royalty method of valuation. This method requires significant assumptions, including assumed royalty rate, future revenues and cost of capital. Assumptions related to operating performance, such as future revenues, could be affected by loss of a customer contract, a decline in U.S. Government funding or a decline in demand based on changing economic or regulatory conditions. Changes in external market conditions may affect certain other assumptions, such as the cost of capital. Market conditions can be volatile and are outside of our control.
Adverse changes in these assumptions utilized within our indefinite-lived intangible asset impairment test could cause a reduction or elimination of excess fair value over carrying value, resulting in potential recognition of impairment.
We have completed our annual review of our indefinite-lived intangible assets for the year ended December 31, 2025, which indicated that we had no impairment. The fair value of our indefinite-lived intangible assets was substantially in excess of carrying value.
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 NRC and the CNSC. In estimating fair value, we use present value of cash flows expected to be incurred in settling our obligations. To the extent possible, we perform a marketplace assessment of the cost and timing of performing the retirement activities. We apply a credit-adjusted risk-free interest rate to our expected cash flows in our determination of fair value. Actual costs incurred to decommission our facilities may differ from the accreted liability. For environmental liabilities associated with assets that we no longer operate, we have accrued amounts based on the estimated costs of cleanup activities, net of the anticipated effect of any applicable 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 the decommissioning costs.
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Results of Operations – Years Ended December 31, 2025, 2024 and 2023
Selected financial highlights are presented in the table below:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| REVENUES: | ||||||||||||||||||||
| Government Operations | $ | 2,350,090 | $ | 2,183,040 | $ | 2,031,337 | ||||||||||||||
| Commercial Operations | 853,070 | 523,972 | 466,344 | |||||||||||||||||
| Eliminations | (4,735) | (3,358) | (1,372) | |||||||||||||||||
| $ | 3,198,425 | $ | 2,703,654 | $ | 2,496,309 | |||||||||||||||
| OPERATING INCOME: | ||||||||||||||||||||
| Government Operations | $ | 394,850 | $ | 377,875 | $ | 374,682 | ||||||||||||||
| Commercial Operations | 57,728 | 46,816 | 37,532 | |||||||||||||||||
| $ | 452,578 | $ | 424,691 | $ | 412,214 | |||||||||||||||
| Unallocated Corporate | (48,119) | (44,084) | (29,155) | |||||||||||||||||
| Total Operating Income | $ | 404,459 | $ | 380,607 | $ | 383,059 | ||||||||||||||
This section discusses our 2025 and 2024 results of operations and contains year-to-year comparisons between 2025 and 2024. Discussions of our 2024 results and year-to-year comparisons between 2024 and 2023 that are not included in this Report can be found in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
Consolidated Results of Operations
Year Ended December 31, 2025 vs. 2024
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 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 partially offset by an increase in Unallocated Corporate expenses of $4.0 million when compared to the prior year.
Government Operations
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | $ Change | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | 2,350,090 | $ | 2,183,040 | $ | 167,050 | ||||||||||||||
| Operating Income | $ | 394,850 | $ | 377,875 | $ | 16,975 | ||||||||||||||
| % of Revenues | 16.8% | 17.3% | ||||||||||||||||||
Year Ended December 31, 2025 vs. 2024
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 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.
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Commercial Operations
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | $ Change | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | 853,070 | $ | 523,972 | $ | 329,098 | ||||||||||||||
| Operating Income | $ | 57,728 | $ | 46,816 | $ | 10,912 | ||||||||||||||
| % of Revenues | 6.8% | 8.9% | ||||||||||||||||||
Year Ended December 31, 2025 vs. 2024
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 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, 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. 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 $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
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | $ Change | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
Income before Provision for Income Taxes | $ | 398,120 | $ | 348,720 | $ | 49,400 | ||||||||||||||
Provision for Income Taxes | $ | 68,259 | $ | 66,422 | $ | 1,837 | ||||||||||||||
Effective Tax Rate | 17.1% | 19.0% | ||||||||||||||||||
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 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.
See Note 5 to our consolidated financial statements included in this Report for further information on income taxes.
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Effects of Inflation and Changing Prices
Our financial statements are prepared in accordance with GAAP, using historical U.S. dollar accounting ("historical cost"). Statements based on historical cost, however, do not adequately reflect the cumulative effect of increasing costs and changes in the purchasing power of the U.S. dollar, especially during times of significant and continued inflation.
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 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 $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.
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.
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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 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 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
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 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 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. The 2020 Indenture also contains customary negative covenants. As of December 31, 2025, 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
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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, 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. The 2021 Indenture also contains customary negative covenants. 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
2030 Notes
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.
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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
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, 2025, surety bonds issued and outstanding under these arrangements totaled approximately $363.0 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 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.
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Other
Cash, Cash Equivalents, Restricted Cash and Investments
In the aggregate, our cash and cash equivalents, restricted cash and cash equivalents and investments increased by $424.3 million to $515.4 million at December 31, 2025 from $91.2 million at December 31, 2024, primarily due to the items discussed below. Our domestic and foreign cash and cash equivalents, restricted cash and cash equivalents and investments as of December 31, 2025 and 2024 were as follows:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Domestic | $ | 501,259 | $ | 69,595 | ||||||||||
| Foreign | 14,188 | 21,585 | ||||||||||||
| Total | $ | 515,447 | $ | 91,180 | ||||||||||
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 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. Our investment portfolio consists primarily of corporate bonds and mutual funds.
Cash Requirements
We believe we have sufficient cash and cash equivalents and borrowing capacity, along with cash generated from operations and continued access to debt markets, to satisfy our cash requirements for the next 12 months and beyond.
Our cash requirements as of December 31, 2025 include the following contractual obligations:
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | After 5 Years | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| Long-term debt principal | $ | 2,051,967 | $ | — | $ | 400,000 | $ | 1,650,000 | $ | 1,967 | ||||||||||||||||||||||
| Interest payments | $ | 132,000 | $ | 33,000 | $ | 66,000 | $ | 33,000 | $ | — | ||||||||||||||||||||||
| Lease payments | $ | 59,080 | $ | 9,079 | $ | 15,603 | $ | 10,503 | $ | 23,895 | ||||||||||||||||||||||
Our contingent commitments under letters of credit and surety bonds currently outstanding expire as follows:
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | Thereafter | ||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| $ 413,006 | $ 193,721 | $ 193,506 | $ 25,779 | $ — | ||||||||||||||||||||||
42
Other cash requirements include, among other things, capital expenditures, payment of dividends, repurchases of common stock, capital contributions for joint ventures and contributions to our pension and other postretirement benefit plans.
Since 2017, we have made considerable investments in property, plant and equipment to support the growth of our Government Operations and Commercial Operations segments. 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 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.
During the year ended December 31, 2025, we paid $92.5 million in dividends to holders of our common stock. The declaration and payment of future dividends will be at the discretion of our Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our business, legal and regulatory requirements and other factors that our Board of Directors may deem relevant.
In April 2021, our Board of Directors authorized us to repurchase an indeterminate number of shares of our common stock up to an aggregate market value of $500 million. As of December 31, 2025, the total remaining share repurchase authorization was $347.6 million. See Item 5 of this Report for additional share repurchase information.
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.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk from changes in interest rates relates primarily to our debt instruments. Our borrowings include both fixed and variable interest rate debt. At December 31, 2025, we had (i) no outstanding borrowings under the New Credit Facility, $1.4 million in letters of credit issued under the New Credit Facility and $1,248.6 million available under the New Credit Facility, (ii) an aggregate principal amount of $400 million of Senior Notes due 2028 and (iii) an aggregate principal amount of $400 million of Senior Notes due 2029, and (iv) an aggregate principal amount of $1.25 billion of 2030 Notes. See the heading "Liquidity and Capital Resources" in Item 7 of this Report for additional information on our debt instruments.
We also have exposure from changes in interest rates related to our cash equivalents and our investment portfolio, which consists primarily of corporate bonds and mutual funds. We are averse to principal loss and seek to ensure the safety and preservation of our invested funds by limiting default risk, market risk and reinvestment risk.
We have operations in foreign locations, and, as a result, our financial results could be significantly affected by factors such as changes in foreign currency exchange ("FX") rates or weak economic conditions in those foreign markets. In order to manage the operational risks associated with FX rate fluctuations, we attempt to hedge those risks with FX derivative instruments. Historically, we have hedged those risks with FX forward contracts. At December 31, 2025, the fair values of our outstanding FX derivative instruments were not significant. We do not enter into speculative derivative positions.
43
Interest Rate Sensitivity
The following tables provide information about our financial instruments that are sensitive to changes in interest rates. The tables present principal cash flows and related weighted-average interest rates by expected maturity dates.
| Principal Amount by Expected Maturity (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2025: | Fair Value at | |||||||||||||||||||||||||||||||||||||||||||||||||
| Years Ending December 31, | December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | 2025 | |||||||||||||||||||||||||||||||||||||||||||
Investments | — | — | — | — | — | $ | 6,945 | $ | 6,945 | $ | 8,243 | |||||||||||||||||||||||||||||||||||||||
Average Interest Rate | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Note Receivable | 6,399 | — | — | — | — | — | $ | 6,399 | $ | 6,433 | ||||||||||||||||||||||||||||||||||||||||
Average Interest Rate | 6.40% | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Fixed Interest Rate Debt | — | — | $ | 400,000 | $ | 400,000 | — | $ | 1,967 | $ | 801,967 | $ | 784,108 | |||||||||||||||||||||||||||||||||||||
Average Interest Rate | — | — | 4.13% | 4.13% | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Convertible Senior Notes | — | $ | — | $ | — | — | $ | 1,250,000 | — | $ | 1,250,000 | $ | 1,194,533 | |||||||||||||||||||||||||||||||||||||
Average Interest Rate | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| At December 31, 2024: | Fair Value at | |||||||||||||||||||||||||||||||||||||||||||||||||
| Years Ending December 31, | December 31, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | 2024 | |||||||||||||||||||||||||||||||||||||||||||
| Investments | — | — | $ | 1,479 | — | — | $ | 7,700 | $ | 9,179 | $ | 10,609 | ||||||||||||||||||||||||||||||||||||||
| Average Interest Rate | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Note Receivable | $ | 6,467 | — | — | — | — | — | $ | 6,467 | $ | 6,367 | |||||||||||||||||||||||||||||||||||||||
| Average Interest Rate | 6.80% | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Fixed Interest Rate Debt | — | — | — | $ | 400,000 | $ | 400,000 | $ | — | $ | 800,000 | $ | 746,529 | |||||||||||||||||||||||||||||||||||||
Average Interest Rate | — | — | — | 4.13% | 4.13% | — | ||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Rate Debt | $ | 12,500 | $ | 12,500 | $ | 237,500 | — | — | — | $ | 262,500 | $ | 262,479 | |||||||||||||||||||||||||||||||||||||
Average Interest Rate | 5.39% | 5.27% | 5.28% | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Exchange Rate Sensitivity
The following table provides information about our FX forward contracts outstanding at December 31, 2025 and presents such information in U.S. dollar equivalents. The table presents notional amounts and related weighted-average FX rates by expected (contractual) maturity dates and constitutes a forward-looking statement. These notional amounts generally are used to calculate the contractual payments to be exchanged under the contract. The average contractual FX rates are expressed using market convention, which is dependent on the currencies being bought and sold under the forward contract.
| Forward Contracts to Purchase Foreign Currencies in U.S. Dollars (in thousands) | ||||||||||||||||||||
| Year Ending | Fair Value at | Average Contractual | ||||||||||||||||||
| Foreign Currency | December 31, 2026 | December 31, 2025 | Exchange Rate | |||||||||||||||||
| Canadian dollar | $ | 1,891 | $ | 9,820 | 1.3689 | |||||||||||||||
| U.S. dollar (selling Canadian dollar) | $ | 215,979 | $ | (4,601) | 1.3786 | |||||||||||||||
| Euro (selling Canadian dollar) | $ | 13,099 | $ | 122 | 1.6128 | |||||||||||||||
| Year Ending | Fair Value at | Average Contractual | ||||||||||||||||||
| Foreign Currency | December 31, 2027 | December 31, 2025 | Exchange Rate | |||||||||||||||||
| U.S. dollar (selling Canadian dollar) | $ | 3,569 | $ | (14) | 1.3559 | |||||||||||||||
| Euro (selling Canadian dollar) | $ | 6,444 | $ | (41) | 1.6296 | |||||||||||||||
| Year Ending | Fair Value at | Average Contractual | ||||||||||||||||||
| Foreign Currency | December 31, 2028 | December 31, 2025 | Exchange Rate | |||||||||||||||||
| Euro (selling Canadian dollar) | $ | 5,901 | $ | (93) | — | |||||||||||||||
44
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, 2025 and 2024, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, 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, 2025, 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 23, 2026, 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.
Acquisitions – Kinectrics Inc. – Fair Value of Property, Plant and Equipment and Customer Relationships Intangible Asset – Refer to Note 2 to the financial statements
Critical Audit Matter Description
The assets acquired and liabilities assumed in the Kinectrics Inc. ("Kinectrics") transaction have been recorded at estimates of fair value as determined by management, based on information available and assumptions as to future operations. Of the total assets acquired and liabilities assumed, the Company acquired $175.0 million of property, plant, and equipment and $107.5 million of customer relationships intangible asset.
We identified the fair value of the aforementioned property, plant and equipment and customer relationships intangible asset for the Kinectrics Inc. acquisition as a critical audit matter because of the significant estimates and assumptions made by management regarding the asset valuation methodology and discount rate for the customer relationships intangible asset acquired as well as the valuation methodology and the cost to replace or reproduce comparable assets for the property, plant, and equipment acquired. This required a high degree of auditor judgment and an increased extent of effort, including the need
45
to involve our fair value specialists when performing audit procedures to evaluate the reasonableness of the valuation methodologies applied to the property, plant, and equipment and customer relationships intangible asset acquired.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the fair value of property, plant, and equipment and customer relationships intangible asset acquired included the following, among others:
•We tested the design and operating effectiveness of controls over management's purchase price allocation procedures, including controls over the methodologies and assumptions used in the fair value for property, plant, and equipment and customer relationships intangible asset, and reviewed the work of management's third-party specialists.
•With the assistance of our fair value specialists, we evaluated the reasonableness of the customer relationships intangible asset valuation methodology and discount rate by:
◦Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation.
◦Developing a range of independent estimates and comparing those to the discount rate selected by management.
•With the assistance of our fair value specialists, we evaluated the reasonableness of the property, plant, and equipment valuation methodology and the cost to replace or reproduce comparable assets. We also developed a range of independent estimates and compared to those used by management, including testing the mathematical accuracy of the calculation.
•We evaluated the reasonableness of management's forecasted information used in the valuation models, including estimated future EBITDA, by:
◦Comparing the estimates to historical and actual results;
◦Evaluating whether the forecasts were consistent with evidence obtained in other areas of the audit;
◦Comparing the estimates to third-party economic research, industry performance, and peer company performance;
◦Corroborating assumptions and estimates with internal communications to management and the Board of Directors; and
◦Testing the accuracy and completeness of certain underlying data used by management.
/S/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
February 23, 2026
We have served as the Company's auditor since 2009.
46
BWX TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands, except share and per share amounts) | ||||||||||||||||||||
Revenues | $ | $ | $ | |||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||
Cost of operations | ||||||||||||||||||||
Research and development costs | ||||||||||||||||||||
| Losses (gains) on asset disposals and impairments, net | ( | |||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||
Total Costs and Expenses | ||||||||||||||||||||
Equity in Income of Investees | ||||||||||||||||||||
Operating Income | ||||||||||||||||||||
Other Income (Expense): | ||||||||||||||||||||
Interest income | ||||||||||||||||||||
Interest expense | ( | ( | ( | |||||||||||||||||
Other – net | ( | |||||||||||||||||||
Total Other Income (Expense) | ( | ( | ( | |||||||||||||||||
Income before Provision for Income Taxes | ||||||||||||||||||||
Provision for Income Taxes | ||||||||||||||||||||
Net Income | $ | $ | $ | |||||||||||||||||
Net Income Attributable to Noncontrolling Interest | ( | ( | ( | |||||||||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | |||||||||||||||||
Earnings per Common Share: | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | |||||||||||||||||
Diluted: | ||||||||||||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | |||||||||||||||||
| Shares used in the computation of earnings per share (Note 17): | ||||||||||||||||||||
Basic | ||||||||||||||||||||
Diluted | ||||||||||||||||||||
See accompanying notes to consolidated financial statements.
47
BWX TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
Net Income | $ | $ | $ | |||||||||||||||||
Other Comprehensive Income (Loss): | ||||||||||||||||||||
| Currency translation adjustments | ( | |||||||||||||||||||
| Derivative financial instruments: | ||||||||||||||||||||
Unrealized gains arising during the period, net of tax provision of $( | ||||||||||||||||||||
Reclassification adjustment for gains included in net income, net of tax provision of $ | ( | ( | ( | |||||||||||||||||
| Benefit obligations: | ||||||||||||||||||||
Unrecognized losses arising during the period, net of tax benefit of $ | ( | ( | ( | |||||||||||||||||
Recognition of benefit plan costs, net of tax benefit of $( | ||||||||||||||||||||
| Investments: | ||||||||||||||||||||
Unrealized (losses) gains arising during the period, net of tax provision of $( | ( | |||||||||||||||||||
Reclassification adjustment for gains included in net income during the period, net of tax provision of $ | ( | |||||||||||||||||||
Other Comprehensive Income (Loss) | ( | |||||||||||||||||||
Total Comprehensive Income | ||||||||||||||||||||
Comprehensive Income Attributable to Noncontrolling Interest | ( | ( | ( | |||||||||||||||||
Comprehensive Income Attributable to BWX Technologies, Inc. | $ | $ | $ | |||||||||||||||||
See accompanying notes to consolidated financial statements.
48
BWX TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash and cash equivalents | ||||||||||||||
| Accounts receivable – trade, net | ||||||||||||||
| Accounts receivable – other | ||||||||||||||
| Retainages | ||||||||||||||
| Contracts in progress | ||||||||||||||
| Inventories | ||||||||||||||
| Other current assets | ||||||||||||||
| Total Current Assets | ||||||||||||||
| Property, Plant and Equipment, Net | ||||||||||||||
| Investments | ||||||||||||||
| Goodwill | ||||||||||||||
| Deferred Income Taxes | ||||||||||||||
| Investments in Unconsolidated Affiliates | ||||||||||||||
| Intangible Assets | ||||||||||||||
| Other Assets | ||||||||||||||
| TOTAL ASSETS | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
49
BWX TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands, except share and per share amounts) | ||||||||||||||
Current Liabilities: | ||||||||||||||
| Current maturities of long-term debt | $ | $ | ||||||||||||
| Accounts payable | ||||||||||||||
| Accrued employee benefits | ||||||||||||||
| Accrued liabilities – other | ||||||||||||||
| Advance billings on contracts | ||||||||||||||
| Total Current Liabilities | ||||||||||||||
Long-Term Debt | ||||||||||||||
Accumulated Postretirement Benefit Obligation | ||||||||||||||
Environmental Liabilities | ||||||||||||||
Pension Liability | ||||||||||||||
Other Liabilities | ||||||||||||||
| Total Liabilities | ||||||||||||||
| Commitments and Contingencies (Note 10) | ||||||||||||||
Stockholders' Equity: | ||||||||||||||
Common stock, par value $ | ||||||||||||||
Preferred stock, par value $ | ||||||||||||||
| Capital in excess of par value | ||||||||||||||
| Retained earnings | ||||||||||||||
Treasury stock at cost, | ( | ( | ||||||||||||
| Accumulated other comprehensive income (loss) | ( | ( | ||||||||||||
| Stockholders' Equity – BWX Technologies, Inc. | ||||||||||||||
| Noncontrolling interest | ( | |||||||||||||
| Total Stockholders' Equity | ||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ | ||||||||||||
See accompanying notes to consolidated financial statements.
50
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, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative financial instruments | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Defined benefit obligations | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale investments | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercises of stock options | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares placed in treasury | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation charges | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Derivative financial instruments | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Defined benefit obligations | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale investments | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercises of stock options | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares placed in treasury | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation charges | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared ($ | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustments | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative financial instruments | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Defined benefit obligations | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale investments | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Exercises of stock options | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares placed in treasury | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation charges | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interests | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of capped calls related to convertible senior notes | — | — | ( | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
51
BWX TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | (In thousands) | |||||||||||||||||||
| Net Income | $ | $ | $ | |||||||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Depreciation and amortization | ||||||||||||||||||||
| Income of investees, net of dividends | ( | |||||||||||||||||||
| Losses (gains) on asset disposals and impairments - net | ( | |||||||||||||||||||
| Provision for deferred taxes | ( | |||||||||||||||||||
| Recognition of (gains) losses for pension and postretirement plans | ( | |||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||
| Other, net | ( | ( | ( | |||||||||||||||||
| Changes in assets and liabilities, net of effects from acquisitions: | ||||||||||||||||||||
| Accounts receivable | ( | ( | ||||||||||||||||||
| Accounts payable | ( | ( | ||||||||||||||||||
| Retainages | ( | ( | ||||||||||||||||||
| Contracts in progress and advance billings on contracts | ( | |||||||||||||||||||
| Income taxes | ( | ( | ||||||||||||||||||
| Accrued and other current liabilities | ( | |||||||||||||||||||
| Pension liabilities, accrued postretirement benefit obligations and employee benefits | ( | ( | ||||||||||||||||||
| Other, net | ( | ( | ( | |||||||||||||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||||||
| Purchases of property, plant and equipment | ( | ( | ( | |||||||||||||||||
| Acquisition of businesses | ( | |||||||||||||||||||
| Purchases of securities | ( | |||||||||||||||||||
| Sales and maturities of securities | ||||||||||||||||||||
| Investments, net of return of capital, in equity method investees | ( | ( | ||||||||||||||||||
| Other, net | ( | ( | ||||||||||||||||||
| NET CASH USED IN INVESTING ACTIVITIES | ( | ( | ( | |||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||||||
| Payments of short-term borrowing and long-term debt | ( | |||||||||||||||||||
| Proceeds from issuance of convertible senior notes | ||||||||||||||||||||
| Borrowings of long-term debt | ||||||||||||||||||||
| Repayments of long-term debt | ( | ( | ( | |||||||||||||||||
| Payment of debt issuance costs | ( | |||||||||||||||||||
| Purchase of capped calls related to convertible senior notes | ( | |||||||||||||||||||
| Repurchases of common stock | ( | ( | ||||||||||||||||||
| Dividends paid to common shareholders | ( | ( | ( | |||||||||||||||||
| Cash paid for shares withheld to satisfy employee taxes | ( | ( | ( | |||||||||||||||||
| Settlements of forward contracts, net | ||||||||||||||||||||
| Other, net | ( | |||||||||||||||||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | ( | ( | ||||||||||||||||||
| EFFECTS OF EXCHANGE RATE CHANGES ON CASH | ( | ( | ||||||||||||||||||
| TOTAL INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS | ( | |||||||||||||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||||||||||||||||
| CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | $ | $ | |||||||||||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||||||
| Cash paid during the period for: | ||||||||||||||||||||
| Interest | $ | $ | $ | |||||||||||||||||
| Income taxes (net of refunds) | $ | $ | $ | |||||||||||||||||
| SCHEDULE OF NON-CASH INVESTING ACTIVITY: | ||||||||||||||||||||
| Accrued capital expenditures included in accounts payable | $ | $ | $ | |||||||||||||||||
See accompanying notes to consolidated financial statements.
52
BWX TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025
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 balance sheets and statements of cash flows to conform to the presentation at December 31, 2025. 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, develop capabilities related to the manufacture of high-purity depleted uranium, design advanced reactors and manufacture other advanced materials and products for commercial, military and space applications. 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 War (also known as 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 supply the global nuclear industry with large, heavy components and 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 offers a broad suite of nuclear power plant lifecycle support and management services for the global industry and transmission and distribution markets. This segment also manufactures medical radioisotopes, radiopharmaceuticals and medical devices, and partners with life science and pharmaceutical companies developing new drugs.
See Note 3 and Note 15 for financial information about our segments.
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Recently Adopted Accounting Standards
In December 2023, the Financial Accounting Standards Board ("FASB") issued updates to Topic Income Taxes (hereinafter referred to as "ASU 2023-09") 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. During the year ended December 31, 2025, we adopted the provisions of this update which are included in Note 5. 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 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.
54
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 $78.2 million, $53.7 million and $53.0 million in the years ended December 31, 2025, 2024 and 2023, respectively. This includes amounts paid for by our customers of $64.4 million, $46.2 million and $45.4 million in the years ended December 31, 2025, 2024 and 2023, respectively.
Capitalization of Interest Cost
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, 2025 and we do not currently expect Pillar Two to significantly impact our provision for income taxes in the future.
On July 4, 2025, President Trump signed into law an act commonly referred to as the "One Big Beautiful Bill Act". This bill includes a number of tax provisions including extending existing provisions that were set to expire, substantive changes in international tax law rules and the repeal or phase outs of certain energy tax credits. This legislation did not result in a material impact to our results of operations, financial position or cash flows.
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.
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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.
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, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
| Restricted cash and cash equivalents | ||||||||||||||
| Restricted cash and cash equivalents included in Other Assets | ||||||||||||||
Total cash and cash equivalents and restricted cash and cash equivalents as presented on our consolidated statements of cash flows | $ | $ | ||||||||||||
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
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 to 40 years for buildings and to 14 years for machinery and equipment. Our depreciation expense was $85.9 million, $72.9 million and $65.6 million for the years ended December 31, 2025, 2024 and 2023, 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.
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Property, plant and equipment is stated at cost and is set forth below:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Land | $ | $ | ||||||||||||
| Buildings | ||||||||||||||
| Machinery and equipment | ||||||||||||||
| Property under construction | ||||||||||||||
| Less: Accumulated depreciation | ||||||||||||||
| Property, Plant and Equipment, Net | $ | $ | ||||||||||||
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.
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, 2023 | $ | $ | $ | |||||||||||||||||
| Translation | ( | ( | ( | |||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | |||||||||||||||||
| Purchase price adjustment | ||||||||||||||||||||
| Translation | ||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||||||||||
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
57
Our Intangible Assets were as follows:
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Amortized intangible assets: | ||||||||||||||||||||
| Gross cost: | ||||||||||||||||||||
| Technical support agreement | $ | $ | $ | |||||||||||||||||
| Customer relationships | ||||||||||||||||||||
| Unpatented technology | ||||||||||||||||||||
| CNSC class 1B nuclear facility license | ||||||||||||||||||||
| Acquired backlog | ||||||||||||||||||||
| Patented technology | ||||||||||||||||||||
| All other | ||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||
| Accumulated amortization: | ||||||||||||||||||||
| Technical support agreement | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Customer relationships | ( | ( | ( | |||||||||||||||||
| Unpatented technology | ( | ( | ( | |||||||||||||||||
| CNSC class 1B nuclear facility license | ( | ( | ( | |||||||||||||||||
| Acquired backlog | ( | ( | ( | |||||||||||||||||
| Patented technology | ( | ( | ( | |||||||||||||||||
| All other | ( | ( | ( | |||||||||||||||||
| Total | $ | ( | $ | ( | $ | ( | ||||||||||||||
| Net amortized intangible assets | $ | $ | $ | |||||||||||||||||
| Unamortized intangible assets: | ||||||||||||||||||||
| NRC category 1 license | $ | $ | $ | |||||||||||||||||
| Kinectrics trade name | $ | $ | $ | |||||||||||||||||
The following summarizes the changes in the carrying amount of Intangible Assets:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | |||||||||||||||||
| Acquisitions (Note 2) | ||||||||||||||||||||
| Amortization expense | ( | ( | ( | |||||||||||||||||
| Translation | ( | |||||||||||||||||||
| Balance at end of period | $ | $ | $ | |||||||||||||||||
Estimated amortization expense for the next five fiscal years is as follows (amounts in thousands):
| Year Ended December 31, | Amount | ||||
| 2026 | $ | ||||
| 2027 | $ | ||||
| 2028 | $ | ||||
| 2029 | $ | ||||
| 2030 | $ | ||||
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Leases
We lease certain manufacturing facilities, office space and equipment under operating leases with terms of to 20 years. Certain of the leases include options to renew for periods of to ten years . We include lease options in our determination of the right-of-use asset and lease liability if it is reasonably certain that we will exercise one or more of the options. 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 on our consolidated balance sheets. Our current lease liabilities are included in , 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, 2025, we recognized lease expense of $10.7 million, which included $1.5 million related to the amortization of favorable lease agreements, and paid cash of $9.3 million for our operating leases. During the years ended December 31, 2024 and 2023, we recognized lease expense of $7.4 million and $7.9 million, respectively. At December 31, 2025, our weighted-average remaining lease term was 10.19 years, and for the purpose of measuring the present value of our lease liabilities, the weighted-average discount rate was 6.39 %. The maturities of our lease liabilities at December 31, 2025 were as follows (amounts in thousands):
| 2026 | $ | |||||||
| 2027 | $ | |||||||
| 2028 | $ | |||||||
| 2029 | $ | |||||||
| 2030 | $ | |||||||
| Thereafter | $ | |||||||
| Total lease payments | $ | |||||||
| Less: Interest | $ | ( | ||||||
Present value of lease liabilities (1) | $ | |||||||
(1)Includes current lease liabilities of $8.8 million.
At December 31, 2025, our right-of-use assets totaled $65.8 million. The difference between our right-of-use assets and lease liabilities primarily resulted from favorable lease agreements related to acquisitions.
Warranty Expense
Deferred Debt Issuance Costs
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | |||||||||||||||||
| Additions | ||||||||||||||||||||
Interest expense (1) | ( | ( | ( | |||||||||||||||||
| Balance at end of period | $ | $ | $ | |||||||||||||||||
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(1)Includes the recognition of prior deferred debt issuance costs associated with former debt instruments of $(1.5 ) million for the year ended December 31, 2025.
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 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.
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.
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| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Balance at beginning of period | $ | $ | $ | |||||||||||||||||
| Costs incurred | ( | ( | ( | |||||||||||||||||
| Additions/adjustments | ( | ( | ||||||||||||||||||
| Accretion | ||||||||||||||||||||
| Translation | ( | |||||||||||||||||||
Balance at end of period (1) | $ | $ | $ | |||||||||||||||||
(1)Includes current asset retirement obligations of $0.2 million, $1.1 million and $2.3 million at December 31, 2025, 2024 and 2023, respectively.
Self-Insurance
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, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Currency translation adjustments | $ | ( | $ | ( | ||||||||||
| Net unrealized gain on derivative financial instruments | ||||||||||||||
| Unrecognized prior service cost on benefit obligations | ( | ( | ||||||||||||
| Net unrealized (loss) gain on available-for-sale investments | ( | |||||||||||||
| Accumulated other comprehensive income (loss) | $ | ( | $ | ( | ||||||||||
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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, | ||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) Component Recognized | (In thousands) | Line Item Presented | ||||||||||||||||||||||||
| Realized gain on derivative financial instruments | $ | $ | ( | $ | ( | Revenues | ||||||||||||||||||||
Cost of operations | ||||||||||||||||||||||||||
Total before tax | ||||||||||||||||||||||||||
| ( | ( | ( | Provision for Income Taxes | |||||||||||||||||||||||
| $ | $ | $ | Net Income | |||||||||||||||||||||||
Amortization of prior service cost on benefit obligations | $ | ( | $ | ( | $ | ( | Other – net | |||||||||||||||||||
Provision for Income Taxes | ||||||||||||||||||||||||||
| $ | ( | $ | ( | $ | ( | Net Income | ||||||||||||||||||||
| Realized gain on investments | $ | $ | $ | Other - net | ||||||||||||||||||||||
| $ | ( | $ | $ | Income Taxes | ||||||||||||||||||||||
| $ | $ | $ | Net Income | |||||||||||||||||||||||
Total reclassification for the period | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
Foreign Currency Translation
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, 2025, we had deferred approximately $0.0 million of net gains on these derivative financial instruments. For the years ended December 31, 2025, 2024 and 2023, we recognized (gains) losses of $(19.0 ) million, $(38.0 ) million and $5.1 million, respectively, in Other – net on our consolidated statements of income associated with FX forward contracts not designated as hedging instruments.
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At December 31, 2025, our derivative financial instruments consisted of FX forward contracts with a total notional value of $246.9 million with maturities extending to April 2028. 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 high credit ratings. Our counterparties to derivative financial instruments have the benefit of the same collateral arrangements and covenants as described under our New Credit Facility.
New Accounting and Disclosure Standards
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.
In September 2025, the FASB issued updates to Topic Intangibles – Goodwill and Other – Internal-Use Software: Targeted Improvements to the Accounting for Internal-Use Software. These updates modernize the accounting for internal-use software by eliminating the sequential development stages currently in use, and modify when an entity is required to begin capitalizing software costs. Furthermore, disclosures for property, plant and equipment will be required for all capitalized software costs. The updates are effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Early adoption is permitted. Upon adoption, the updates may be applied prospectively, retrospectively or using a modified transition approach. We are currently evaluating the impact of the adoption of this standard on our financial condition, results of operations, cash flows and disclosures.
NOTE 2 – ACQUISITIONS
Aerojet Ordnance Tennessee, Inc.
On January 3, 2025, we acquired all of the equity interests of Aerojet Ordnance Tennessee, Inc. ("A.O.T"), a subsidiary of L3Harris Technologies, Inc. for approximately $101.1 million, subject to certain working capital adjustments, which reflected a $2.2 million reduction in the initial purchase price. 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. is reported as part of our Government Operations segment.
Our purchase price allocation resulted in the recognition of $75.0 million of goodwill, $27.0 million of intangible assets, and $12.7 million of property, plant and equipment. This purchase price allocation reflects a $15.0 million increase to Goodwill, primarily related to a revision to our valuation of contract assets and liabilities identified during the three months ended December 31, 2025. As of December 31, 2025, we completed the determination of fair values of the acquired assets and liabilities assumed.
The intangible assets included above consist of the following (dollar amounts in thousands):
| Amount | Amortization Period | |||||||
| Customer Relationships | $ | |||||||
| Backlog | $ | |||||||
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Kinectrics Inc.
On May 20, 2025, we acquired all of the equity interests in Kinectrics Holdings, Inc., the parent company of Kinectrics Inc. ("Kinectrics") for approximately CAD $782.7 million subject to certain working capital and other adjustments. This resulted in purchase consideration of CAD $614.5 million ($440.6 million U.S. dollar equivalent), which is net of assumed pension liabilities, other postretirement benefit obligations and indebtedness.
Kinectrics is a leader in providing lifecycle management services for the global nuclear power, 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. Kinectrics is reported as part of our Commercial Operations segment.
The fair value assessment of the Kinectrics acquisition is in process as of the filing date of this Form 10-K. The amounts allocated to the assets acquired and liabilities assumed have been determined by management, using estimates of fair value based on information currently available and on current assumptions of future operations. These fair values are subject to change upon the completion of purchase accounting, the impact of which may be material.
The estimates of fair value resulted in the recognition of $175.0 million of property, plant and equipment, $130.1 million of goodwill, $151.3 million of intangible assets, $39.5 million of investments in unconsolidated affiliates and $25.4 million of net working capital, net of acquired pension liabilities and other postretirement benefit obligations totaling $90.3 million. This purchase price allocation reflects a $18.2 million reduction to goodwill related to the finalization of tax elections made during the three months ended December 31, 2025.
The intangible assets included above consist of the following (dollar amounts in thousands):
| Amount | Amortization Period | |||||||
| Trade name | $ | Indefinite | ||||||
| Developed technology | $ | |||||||
| Customer relationships | $ | |||||||
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 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.
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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, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government Operations | Commercial Operations | Total | Government Operations | Commercial Operations | Total | Government Operations | Commercial Operations | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| United States: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-Government | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Canada: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-Government | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Other: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Non-Government | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Eliminations | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues by timing of transfer of goods or services were as follows:
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government Operations | Commercial Operations | Total | Government Operations | Commercial Operations | Total | Government Operations | Commercial Operations | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Over time | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Point-in-time | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Eliminations | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenues by contract type were as follows:
| Year Ended December 31, 2025 | Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government Operations | Commercial Operations | Total | Government Operations | Commercial Operations | Total | Government Operations | Commercial Operations | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fixed-Price Incentive Fee | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Firm-Fixed-Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost-Plus Fee | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time-and-Materials | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Revenues | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Eliminations | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | $ | $ | |||||||||||||||||
Operating Income (1) | $ | $ | $ | |||||||||||||||||
(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.
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.
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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, 2025, our unbilled receivables increased $35.3 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, 2025, our Advance billings on contracts increased $144.0 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, | |||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Included in Contracts in progress: | ||||||||||||||
| Unbilled receivables | $ | $ | ||||||||||||
| Retainages | $ | $ | ||||||||||||
| Advance billings on contracts | $ | $ | ||||||||||||
During the years ended December 31, 2025 and 2024, we recognized $150.5 million and $87.0 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, 2025, our ending backlog was $7,260.7 million, which included $2,151.3 million of unfunded backlog related to U.S. Government contracts. We expect to recognize approximately 40 % of the revenue associated with our backlog by the end of 2026, 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 was $29.1 million and $40.4 million at December 31, 2025 and 2024, respectively. These amounts are included in Investments in Unconsolidated Affiliates on our consolidated balance sheets.
The following tables summarize combined balance sheet and income statement information for investments accounted for under the equity method:
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| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Current assets | $ | $ | ||||||||||||
| Noncurrent assets | ||||||||||||||
| Total Assets | $ | $ | ||||||||||||
| Total Liabilities | $ | $ | ||||||||||||
| Owners' equity | ||||||||||||||
| Total Liabilities and Owners' Equity | $ | $ | ||||||||||||
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Revenues | $ | $ | $ | |||||||||||||||||
| Gross profit | $ | $ | $ | |||||||||||||||||
| Net income | $ | $ | $ | |||||||||||||||||
Reimbursable costs recorded in revenues by the unconsolidated joint ventures in our Government Operations segment totaled $7,164.1 million, $5,495.9 million and $5,126.6 million for the years ended December 31, 2025, 2024 and 2023, 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, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
Equity income based on stated ownership percentages | $ | $ | $ | |||||||||||||||||
| GAAP and other adjustments | ( | |||||||||||||||||||
Equity in income of investees | $ | $ | $ | |||||||||||||||||
Our transactions with unconsolidated affiliates were as follows:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Sales to | $ | $ | $ | |||||||||||||||||
| Dividends received | $ | $ | $ | |||||||||||||||||
| Capital contributions, net of returns | $ | $ | $ | |||||||||||||||||
At December 31, 2025 and 2024, Accounts receivable – other included amounts due from unconsolidated affiliates of $3.7 million and $0.0 million, respectively.
NOTE 5 – INCOME TAXES
We are subject to federal income tax in the U.S., Canada, and various other jurisdictions., 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, can contribute to shifts in our effective tax rate from period to period.
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We are currently under audit by various state and international authorities. We do not have any returns under examination for years prior to 2020.
Certain jurisdictions now implement the Organization for Economic Cooperation and Development's (OECD) Pillar Two rules regarding a global minimum tax. As of December 31, 2025, these new rules have not impacted our provision for income taxes.
We apply the provisions of FASB Topic Income Taxes regarding the treatment of uncertain tax positions. A reconciliation of unrecognized tax benefits (exclusive of interest and federal and state benefits) is as follows:
| Year Ended December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
Balance at beginning of period (1) | $ | $ | ||||||||||||
| Increases based on tax positions taken in the current year | ||||||||||||||
| Increases based on tax positions taken in prior years | ||||||||||||||
| Decreases based on tax positions taken in prior years | ( | |||||||||||||
| Decreases due to settlements with tax authorities | ||||||||||||||
| Decreases due to lapse of applicable statute of limitation | ||||||||||||||
| Other, net | ||||||||||||||
| Balance at end of period | $ | $ | ||||||||||||
The unrecognized tax benefits balance of $15.1 million at December 31, 2025 would reduce our effective tax rate if recognized.
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, 2025 and 2024 were as follows:
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| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Deferred tax assets: | ||||||||||||||
| Pension liability | $ | $ | ||||||||||||
| Accrued warranty expense | ||||||||||||||
| Capitalized Section 174 expenditures | ||||||||||||||
| Accrued vacation pay | ||||||||||||||
| Accrued liabilities for executive and employee incentive compensation | ||||||||||||||
| Environmental and products liabilities | ||||||||||||||
| Lease liabilities | ||||||||||||||
| Investments in joint ventures and affiliated companies | ||||||||||||||
| Convertible debt premium | ||||||||||||||
| U.S. federal tax credits and loss carryforward | ||||||||||||||
| U.S. state tax credits and loss carryforward | ||||||||||||||
| Foreign tax credit and loss carryforward | ||||||||||||||
| Other | ||||||||||||||
| Gross deferred tax assets | ||||||||||||||
| Valuation allowance for deferred tax assets | ( | ( | ||||||||||||
| Total deferred tax assets | ||||||||||||||
| Deferred tax liabilities: | ||||||||||||||
| Property, plant and equipment | ||||||||||||||
| Long-term contracts | ||||||||||||||
| Right-of-use lease assets | ||||||||||||||
| Accrued liabilities for self-insurance (including postretirement health care benefits) | ||||||||||||||
| Intangibles | ||||||||||||||
| Total deferred tax liabilities | ||||||||||||||
| Net deferred tax liabilities | $ | ( | $ | ( | ||||||||||
The components of Income before Provision for Income Taxes were as follows:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| U.S. | $ | $ | $ | |||||||||||||||||
| Other than U.S. | ||||||||||||||||||||
| Income before Provision for Income Taxes | $ | $ | $ | |||||||||||||||||
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The components of Provision for Income Taxes were as follows:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Current: | ||||||||||||||||||||
| U.S. – federal | $ | $ | $ | |||||||||||||||||
| U.S. – state and local | ||||||||||||||||||||
| Other than U.S. | ||||||||||||||||||||
| Total current | ||||||||||||||||||||
| Deferred: | ||||||||||||||||||||
| U.S. – federal | ( | |||||||||||||||||||
| U.S. – state and local | ( | ( | ||||||||||||||||||
| Other than U.S. | ||||||||||||||||||||
| Total deferred | ( | |||||||||||||||||||
| Provision for Income Taxes | $ | $ | $ | |||||||||||||||||
The following is a reconciliation of our income tax provision from the U.S. statutory federal tax rate to our consolidated effective tax rate for the year ended December 31, 2025, updated to reflect the adoption of ASU 2023-09:
| Year Ended December 31, | ||||||||||||||
| 2025 | ||||||||||||||
| (In thousands) | ||||||||||||||
| Income before provision for income taxes | $ | |||||||||||||
| U.S. federal statutory tax rate | % | |||||||||||||
State and local income taxes, net of Federal income tax effects (1) | % | |||||||||||||
| Foreign tax effects | ||||||||||||||
| Canada - capital loss realization | ( | ( | % | |||||||||||
| Other | ( | ( | % | |||||||||||
| Effect of changes in tax laws or rates enacted in the current period | % | |||||||||||||
| Effect of cross-border tax laws | % | |||||||||||||
| Tax credits | ||||||||||||||
| U.S. research and development tax credit | ( | ( | % | |||||||||||
| Nontaxable or nondeductible items | ( | ( | % | |||||||||||
| Changes in unrecognized tax benefits | ( | ( | % | |||||||||||
| Other adjustments | ( | ( | % | |||||||||||
| Effective tax rate | $ | % | ||||||||||||
(1)State taxes in Virginia, Tennessee, Ohio, California and New Mexico made up greater than 50% of the tax effect in this category.
The following is a reconciliation of our income tax provision from the U.S. statutory federal tax rate to our consolidated effective tax rate as previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09:
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| U.S. federal statutory tax rate | % | % | ||||||||||||
| State and local income taxes | % | % | ||||||||||||
| Research and development tax credit | ( | % | % | |||||||||||
| Excess tax deductions on equity compensation | ( | % | ( | % | ||||||||||
| Other, net | % | % | ||||||||||||
| Effective tax rate | % | % | ||||||||||||
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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 the prior reporting period.
The amounts of cash taxes paid by the Company are as follows:
| Year Ended December 31, | 2025 | ||||
| U.S. – federal | $ | ||||
| U.S. – state | |||||
| Canada | |||||
| Other | |||||
| Income taxes, net of amounts refunded | $ | ||||
At December 31, 2025, we had a valuation allowance of $14.9 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.
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, 2025 | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Year Ended December 31, 2024 | $ | ( | $ | $ | $ | ( | ||||||||||||||||||||
| Year Ended December 31, 2023 | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||
We have federal net operating losses of $3.4 million available to offset future taxable income. The federal net operating losses have an indefinite carryforward period. We are carrying a full valuation allowance of $3.4 million against the deferred tax asset related to these federal net operating loss carryforwards.
We have state credits and state net operating losses of $14.6 million ($11.5 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 2026. We are carrying a full valuation allowance of $14.6 million ($11.5 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. All of our foreign earnings are considered indefinitely reinvested. Determination of the amount of unrecognized deferred taxes related to these undistributed earnings is not practicable.
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NOTE 6 – LONG-TERM DEBT
Our Long-Term Debt consists of the following:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| (In thousands) | ||||||||||||||
| Debt Instruments: | ||||||||||||||
| Convertible Debt | $ | $ | ||||||||||||
| Senior Notes | ||||||||||||||
| Credit Facility | ||||||||||||||
| Other Debt | ||||||||||||||
| Less: Amounts due within one year | ||||||||||||||
| Long-Term Debt, gross | ||||||||||||||
| Less: Deferred debt issuance costs | ||||||||||||||
| Long-Term Debt | $ | $ | ||||||||||||
Maturities of Long-Term Debt subsequent to December 31, 2025 are as follows: 2026 – $0.0 million; 2027 – $0.0 million; 2028 – $400.0 million; 2029 – $400.0 million and 2030 and thereafter– $1.25 billion.
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.
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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 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 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
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 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 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. The 2020 Indenture also contains customary negative covenants. As of December 31, 2025, 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
74
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, 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. The 2021 Indenture also contains customary negative covenants. 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
2030 Notes
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.
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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
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, 2025, surety bonds issued and outstanding under these arrangements totaled approximately $363.0 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 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
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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. As of 2021, 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. On May 20, 2025, we completed the acquisition of Kinectrics, inclusive of the Kinectrics Inc. Pension Plan. Through the Kinectrics Inc. Pension Plan, Kinectrics employees are eligible for membership in the plan after completion of three months of continuous service and it is the Company's only defined benefit plan that is open to new participants.
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 including the Pension Benefits Act of the Province of Ontario. 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.
Obligations and Funded Status
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| Pension Benefits Year Ended December 31, | Other Benefits Year Ended December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
Change in benefit obligation: | ||||||||||||||||||||||||||
Benefit obligation at beginning of period | $ | $ | $ | $ | ||||||||||||||||||||||
Service cost | ||||||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||
Plan participants' contributions | ||||||||||||||||||||||||||
Amendments | ||||||||||||||||||||||||||
| Acquisitions | ||||||||||||||||||||||||||
Settlements | ( | |||||||||||||||||||||||||
Actuarial loss (gain) | ( | |||||||||||||||||||||||||
Foreign currency exchange rate changes | ( | ( | ||||||||||||||||||||||||
Benefits paid | ( | ( | ( | ( | ||||||||||||||||||||||
Benefit obligation at end of period | $ | $ | $ | $ | ||||||||||||||||||||||
Change in plan assets: | ||||||||||||||||||||||||||
Fair value of plan assets at beginning of period | $ | $ | $ | $ | ||||||||||||||||||||||
Actual return on plan assets | ||||||||||||||||||||||||||
Plan participants' contributions | ||||||||||||||||||||||||||
Company contributions | ||||||||||||||||||||||||||
Settlements | ( | |||||||||||||||||||||||||
| Acquisitions | ||||||||||||||||||||||||||
Foreign currency exchange rate changes | ( | ( | ||||||||||||||||||||||||
Benefits paid | ( | ( | ( | ( | ||||||||||||||||||||||
Fair value of plan assets at the end of period | ||||||||||||||||||||||||||
Funded status | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
Amounts recognized in the balance sheet consist of: | ||||||||||||||||||||||||||
Prepaid postretirement benefit obligation | $ | $ | $ | $ | ||||||||||||||||||||||
Prepaid pension | ||||||||||||||||||||||||||
| Prepaid (accrued) employee benefits | ( | ( | ( | |||||||||||||||||||||||
Accumulated postretirement benefit obligation | ( | ( | ||||||||||||||||||||||||
Pension liability | ( | ( | ||||||||||||||||||||||||
Accrued benefit liability, net | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
Amount recognized in accumulated comprehensive income (before taxes): | ||||||||||||||||||||||||||
Prior service cost (credit) | $ | $ | $ | $ | ||||||||||||||||||||||
Supplemental information: | ||||||||||||||||||||||||||
Plans with accumulated benefit obligation in excess of plan assets: | ||||||||||||||||||||||||||
Projected benefit obligation | $ | $ | N/A | N/A | ||||||||||||||||||||||
Accumulated benefit obligation | $ | $ | $ | $ | ||||||||||||||||||||||
Fair value of plan assets | $ | $ | $ | $ | ||||||||||||||||||||||
Plans with plan assets in excess of accumulated benefit obligation: | ||||||||||||||||||||||||||
Projected benefit obligation | $ | $ | N/A | N/A | ||||||||||||||||||||||
Accumulated benefit obligation | $ | $ | $ | $ | ||||||||||||||||||||||
Fair value of plan assets | $ | $ | $ | $ | ||||||||||||||||||||||
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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, 2025, 2024 and 2023, these amounts were $15.1 million, $7.9 million and $7.9 million, respectively. All other components of net periodic benefit cost are included in on our consolidated statements of income. For the years ended December 31, 2025, 2024 and 2023, these amounts were $(15.2 ) million, $(0.8 ) million and $20.9 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, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||
Components of net periodic benefit cost: | ||||||||||||||||||||||||||||||||||||||
Service cost | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Interest cost | ||||||||||||||||||||||||||||||||||||||
Expected return on plan assets | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||
Amortization of prior service cost | ||||||||||||||||||||||||||||||||||||||
Recognized net actuarial loss (gain) | ( | ( | ||||||||||||||||||||||||||||||||||||
Net periodic benefit cost (income) | $ | ( | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||
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, 2025 and 2024 increased (decreased) by $13.8 million and $(49.0 ) million, respectively, due to changes in the discount rate.
Additional Information
| Pension Benefits Year Ended December 31, | Other Benefits Year Ended December 31, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
Decrease in accumulated other comprehensive income due to actuarial losses – before taxes | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
In the current fiscal year, we have recognized expense in other comprehensive income as a component of net periodic benefit cost of approximately $3.2 million and $0.1 million for our pension benefits and other benefits, respectively.
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Assumptions
| Pension Benefits | Other Benefits | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
Weighted-average assumptions used to determine net periodic benefit obligations at December 31: | ||||||||||||||||||||||||||
Discount rate | % | % | % | % | ||||||||||||||||||||||
| Pension Benefits | Other Benefits | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31: | ||||||||||||||||||||||||||||||||||||||
Discount rate to determine interest cost | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
Expected return on plan assets | % | % | % | % | % | % | ||||||||||||||||||||||||||||||||
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.
| 2025 | 2024 | |||||||||||||
| Assumed health care cost trend rates at December 31: | ||||||||||||||
| Health care cost trend rate assumed for next year | % | % | ||||||||||||
| Rates to which the cost trend rate is assumed to decline (ultimate trend rate) | % | % | ||||||||||||
| Year that the rate reaches ultimate trend rate | ||||||||||||||
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.
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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, 2025 and 2024, the investment returns on domestic plan assets of the Master Trust (net of deductions for management fees) were approximately 10 % and 0 %, respectively.
The following is a summary of the asset allocations for the Master Trust at December 31, 2025 and 2024 by asset category:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Asset Category: | ||||||||||||||
| U.S. Government Securities | % | % | ||||||||||||
| Commingled and Mutual Funds | % | % | ||||||||||||
| Real Estate | % | % | ||||||||||||
| Diversified Credit | % | % | ||||||||||||
| Fixed Income (excluding U.S. Government Securities) | % | % | ||||||||||||
| Partnerships with Security Holdings | % | % | ||||||||||||
| Cash and Accrued Items | % | % | ||||||||||||
| Total | % | % | ||||||||||||
The target allocation for 2026 for the domestic plans, by asset class, is as follows:
| Asset Class: | ||||||||
| Fixed Income | % | |||||||
| Equities | % | |||||||
| Other | % | |||||||
Foreign Plans
We sponsor the following foreign defined benefit plans, both of which are in Canada:
•BWXT Canada Ltd. Bargaining Unit Employees' Pension Plan; and
•Kinectrics Inc. Pension Plan.
The assets of the foreign plans are maintained in separate trusts. The following is a summary of the asset allocations of the foreign plans at December 31, 2025 and 2024 by asset category:
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Asset Category: | ||||||||||||||
| Fixed Income | % | % | ||||||||||||
| Commingled and Mutual Funds | % | % | ||||||||||||
| Cash and Other | % | % | ||||||||||||
| Total | % | % | ||||||||||||
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The target allocation for 2026 for the foreign plans, by asset class, is as follows:
| Asset Class: | ||||||||
| Fixed Income | % | |||||||
| Equities | % | |||||||
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, 2025:
| 12/31/2025 | Level 1 | Level 2 | Level 3 | Unclassified | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| Pension and Other Benefits: | ||||||||||||||||||||||||||||||||
| U.S. Government Securities | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Commingled and Mutual Funds | ||||||||||||||||||||||||||||||||
| Real Estate | ||||||||||||||||||||||||||||||||
| Diversified Credit | ||||||||||||||||||||||||||||||||
| Fixed Income | ||||||||||||||||||||||||||||||||
| Partnerships with Security Holdings | ||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Accrued Items (1) | ||||||||||||||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(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, 2024:
| 12/31/2024 | Level 1 | Level 2 | Level 3 | Unclassified | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
| Pension and Other Benefits: | ||||||||||||||||||||||||||||||||
| U.S. Government Securities | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Commingled and Mutual Funds | ||||||||||||||||||||||||||||||||
| Fixed Income | ||||||||||||||||||||||||||||||||
| Diversified Credit | ||||||||||||||||||||||||||||||||
| Real Estate | ||||||||||||||||||||||||||||||||
| Partnerships with Security Holdings | ||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Accrued Items (1) | ||||||||||||||||||||||||||||||||
| Total Assets | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(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.
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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: | ||||||||||||||||||||||||||
| 2026 | $ | $ | $ | $ | ||||||||||||||||||||||
Expected benefit payments: | ||||||||||||||||||||||||||
| 2026 | $ | $ | $ | $ | ||||||||||||||||||||||
| 2027 | $ | $ | $ | $ | ||||||||||||||||||||||
| 2028 | $ | $ | $ | $ | ||||||||||||||||||||||
| 2029 | $ | $ | $ | $ | ||||||||||||||||||||||
| 2030 | $ | $ | $ | $ | ||||||||||||||||||||||
| 2031-2035 | $ | $ | $ | $ | ||||||||||||||||||||||
Defined Contribution Plans
We also provide benefits under the BWXT Retirement Savings 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 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. One of our foreign plans 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 $43.0 million, $47.4 million and $41.5 million in the years ended December 31, 2025, 2024 and 2023, 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, 2025, repurchased 289,473 shares of our common stock from public market transactions for $30 million. 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. As of December 31, 2025, we had approximately $347.6 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.
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At December 31, 2025, we had a total of 2,488,351 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-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, 2025, 2024 and 2023 totaled $26.4 million, $21.8 million and $16.2 million, respectively, with associated tax benefit totaling $4.9 million, $3.6 million and $2.6 million, respectively.
As of December 31, 2025, unrecognized estimated compensation expense related to nonvested awards was $22.5 million, which is expected to be recognized over a weighted-average period of 1.7 years.
Stock Options
The following table summarizes activity for our stock options for the year ended December 31, 2025 (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 | $ | |||||||||||||||||||||||||
| Granted | $ | |||||||||||||||||||||||||
| Exercised | ( | $ | ||||||||||||||||||||||||
| Cancelled/expired/forfeited | ( | $ | ||||||||||||||||||||||||
| Outstanding at end of period | $ | $ | ||||||||||||||||||||||||
| Exercisable at end of period | $ | $ | ||||||||||||||||||||||||
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, 2025. The intrinsic value is
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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, 2025, 2024 and 2023, the total intrinsic value of stock options exercised was $4.3 million, $1.7 million and $2.8 million, respectively. The actual tax benefits realized related to the stock options exercised during the year ended December 31, 2025 totaled $0.9 million.
Restricted Stock Units
Nonvested restricted stock units as of December 31, 2025 and changes during the year ended December 31, 2025 were as follows (share data in thousands):
| Number of Shares | Weighted- Average Grant Date Fair Value | |||||||||||||
| Nonvested at beginning of period | $ | |||||||||||||
| Granted | $ | |||||||||||||
| Vested | ( | $ | ||||||||||||
| Cancelled/forfeited | ( | $ | ||||||||||||
| Nonvested at end of period | $ | |||||||||||||
The actual tax benefits realized related to the restricted stock units vested during the year ended December 31, 2025 totaled $2.7 million.
Performance Shares
Nonvested performance shares as of December 31, 2025 and changes during the year ended December 31, 2025 were as follows (share data in thousands):
| Number of Shares | Weighted- Average Grant Date Fair Value | |||||||||||||
| Nonvested at beginning of period | $ | |||||||||||||
| Adjustment to assumed vesting percentage | $ | |||||||||||||
| Granted | $ | |||||||||||||
| Vested | ( | $ | ||||||||||||
| Cancelled/forfeited | ( | $ | ||||||||||||
| Nonvested at end of period | $ | |||||||||||||
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 153 %.
The actual tax benefits realized related to the performance shares vested during the year ended December 31, 2025 totaled $1.5 million.
Cash-Settled Awards
As of December 31, 2025, we did not have any cash-settled stock appreciation rights, restricted stock units or performance units outstanding.
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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 $71.5 million and $68.1 million during the years ended December 31, 2025 and 2024, 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 $32.5 million and $28.5 million during the years ended December 31, 2025 and 2024, 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 20.3 million, $22.7 million and $20.0 million in the years ended December 31, 2025, 2024 and 2023, respectively. In addition, compliance with existing environmental regulations necessitated capital expenditures of $1.2 million, $0.8 million and $0.7 million in the years ended December 31, 2025, 2024 and 2023, respectively. At December 31, 2025 and 2024, we had total environmental accruals 107.2 million and $103.4 million, respectively. Of our total environmental accruals at December 31, 2025 and 2024, $6.9 million and $9.2 million, respectively, were included in . 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.
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NOTE 11 – RISKS AND UNCERTAINTIES
Revenue Recognized Over Time
As of December 31, 2025, 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, 2025, 2024 and 2023, U.S. Government contracts accounted for approximately 68 %, 76 % and 75 % of our total consolidated revenues, respectively. Accounts receivable due directly or indirectly from the U.S. Government represented 28 % and 40 % of net receivables at December 31, 2025 and 2024, respectively. In the years ended December 31, 2025, 2024 and 2023, revenues from four large utility customers accounted for approximately 17 %, 14 % and 14 % of our total consolidated revenues, respectively. Accounts receivable due directly from four large utility customers represented 50 % and 19 % of net receivables at December 31, 2025 and 2024, 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, 2025 and 2024, the allowances for possible losses that we deducted from Accounts receivable – trade, net on our consolidated balance sheets were $0.6 million and $0.3 million, respectively.
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NOTE 13 – INVESTMENTS
The following is a summary of our investments at December 31, 2025:
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | |||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||
Mutual funds | $ | $ | $ | $ | ||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
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 | $ | $ | $ | $ | ||||||||||||||||||||||
Available-for-sale securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||||||||||||
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.
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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, 2025:
| 12/31/2025 | Level 1 | Level 2 | Level 3 | Unclassified | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Mutual funds | $ | $ | $ | $ | $ | — | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | — | ||||||||||||||||||||||||||
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 | $ | $ | $ | $ | $ | — | ||||||||||||||||||||||||||
Available-for-sale securities | ||||||||||||||||||||||||||||||||
Corporate bonds | — | |||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | — | ||||||||||||||||||||||||||
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, 2025 and 2024, we had FX forward contracts outstanding to purchase or sell foreign currencies, primarily Canadian dollars and Euros, with a total fair value of $5.2 million and $8.2 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, 2025 and 2024, the fair value of our Senior Notes due 2028 was $392.9 million and $374.6 million, respectively. At December 31, 2025 and 2024, the fair value of our Senior Notes due 2029 was $389.3 million and $371.9 million, respectively. At December 31, 2025, the fair value of our 2030 Notes was $1.194 billion. The fair value of our remaining debt instruments approximated their carrying values at December 31, 2025 and 2024.
89
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, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| REVENUES: | ||||||||||||||||||||
| Government Operations | $ | $ | $ | |||||||||||||||||
| Commercial Operations | ||||||||||||||||||||
| Eliminations | ( | ( | ( | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
| SEGMENT EXPENSES: | ||||||||||||||||||||
| Government Operations: | ||||||||||||||||||||
| Research and Development Costs | $ | $ | $ | |||||||||||||||||
| Losses (Gains) on Asset Disposals and Impairments, Net | ( | |||||||||||||||||||
Other Segment Expenses (1) | ||||||||||||||||||||
| Commercial Operations: | ||||||||||||||||||||
| Research and Development Costs | $ | $ | $ | |||||||||||||||||
| Losses (Gains) on Asset Disposals and Impairments, Net | ( | |||||||||||||||||||
Other Segment Expenses (1) | ||||||||||||||||||||
| Total Segment Expenses | $ | $ | $ | |||||||||||||||||
| OPERATING INCOME: | ||||||||||||||||||||
| Government Operations | $ | $ | $ | |||||||||||||||||
| Commercial Operations | ||||||||||||||||||||
Unallocated Corporate (2) | ( | ( | ( | |||||||||||||||||
Total Operating Income (3) | $ | $ | $ | |||||||||||||||||
| Other Income (Expense) | ( | ( | ( | |||||||||||||||||
| Income before Provision for Income Taxes | $ | $ | $ | |||||||||||||||||
(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, 2025, 2024 and 2023, Unallocated Corporate includes losses (gains) on asset disposals and impairments, net of $0.0 million, $1.9 million and $0.0 million, respectively.
(3)The following amounts are included in Operating Income:
Equity in Income of Investees: | ||||||||||||||||||||
| Government Operations | $ | $ | $ | |||||||||||||||||
| Commercial Operations | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
90
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| CAPITAL EXPENDITURES: | ||||||||||||||||||||
| Government Operations | $ | $ | $ | |||||||||||||||||
| Commercial Operations | ||||||||||||||||||||
| Segment Capital Expenditures | ||||||||||||||||||||
| Corporate Capital Expenditures | ||||||||||||||||||||
| Total Capital Expenditures | $ | $ | $ | |||||||||||||||||
| DEPRECIATION AND AMORTIZATION: | ||||||||||||||||||||
| Government Operations | $ | $ | $ | |||||||||||||||||
| Commercial Operations | ||||||||||||||||||||
| Segment Depreciation and Amortization | ||||||||||||||||||||
| Corporate Depreciation and Amortization | ||||||||||||||||||||
| Total Depreciation and Amortization | $ | $ | $ | |||||||||||||||||
Information about our Product and Service Lines:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| REVENUES: | ||||||||||||||||||||
| Government Operations: | ||||||||||||||||||||
| Nuclear Components and Fuel | $ | $ | $ | |||||||||||||||||
| Uranium Processing and Nuclear Services | ||||||||||||||||||||
| Advanced Reactor Design and Engineering | ||||||||||||||||||||
| Commercial Operations: | ||||||||||||||||||||
| Nuclear Manufacturing | ||||||||||||||||||||
| Nuclear Services and Engineering | ||||||||||||||||||||
| Eliminations | ( | ( | ( | |||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
Information about our Consolidated Operations in Different Geographic Areas:
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| NET PROPERTY, PLANT AND EQUIPMENT: | ||||||||||||||||||||
| United States | $ | $ | $ | |||||||||||||||||
| Canada | ||||||||||||||||||||
| All Other Countries | ||||||||||||||||||||
| $ | $ | $ | ||||||||||||||||||
See Note 3 for revenues by geographic area for each of our segments.
91
Information about our Major Customers:
In the years ended December 31, 2025, 2024 and 2023, sales to the U.S. Government accounted for approximately 91 %, 95 % and 93 % of our Government Operations segment revenues, respectively. In the years ended December 31, 2025, 2024 and 2023, sales to large utility customers accounted for approximately 63 %, 71 % and 77 % of our Commercial Operations segment revenues, respectively.
Evaluation of segment performance:
Our Chief Operating Decision Maker (the "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, 2025 and 2024:
| Year Ended December 31, 2025 Quarter Ended | ||||||||||||||||||||||||||
| March 31, 2025 | June 30, 2025 | September 30, 2025 | December 31, 2025 | |||||||||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||||||||||||
Revenues | $ | $ | $ | $ | ||||||||||||||||||||||
Operating income (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Equity in income of investees | $ | $ | $ | $ | ||||||||||||||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
(1)Includes equity in income of investees.
In the quarter ended June 30, 2025, we recognized favorable contract adjustments totaling $29.4 million related to a nuclear operations contract.
| 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 | $ | $ | $ | $ | ||||||||||||||||||||||
Operating income (1) | $ | $ | $ | $ | ||||||||||||||||||||||
Equity in income of investees | $ | $ | $ | $ | ||||||||||||||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
Earnings per common share: | ||||||||||||||||||||||||||
| Basic: | ||||||||||||||||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted: | ||||||||||||||||||||||||||
| Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
(1)Includes equity in income of investees.
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, 2025 and 2024, the effects of these adjustments on pre-tax income were $6.6 million and $(10.6 ) million, respectively.
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NOTE 17 – EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (In thousands, except shares and per share amounts) | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | |||||||||||||||||
Weighted-average common shares | ||||||||||||||||||||
Basic earnings per common share | $ | $ | $ | |||||||||||||||||
Diluted: | ||||||||||||||||||||
Net Income Attributable to BWX Technologies, Inc. | $ | $ | $ | |||||||||||||||||
Weighted-average common shares (basic) | ||||||||||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||
Stock options, restricted stock units and performance shares (1) | ||||||||||||||||||||
Adjusted weighted-average common shares | ||||||||||||||||||||
Diluted earnings per common share | $ | $ | $ | |||||||||||||||||
(1)At December 31, 2025, 2024 and 2023, we excluded 12,156 , 64,575 and 6,089 shares, respectively, from our diluted share calculation as their effect would have been antidilutive.
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Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) adopted by the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Our disclosure controls and procedures were developed through a process in which our management applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding the control objectives. It should be noted that the design of any system of disclosure controls and procedures is based in part upon various assumptions about the likelihood of future events, and we cannot assure that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based on the evaluation referred to above, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective as of December 31, 2025 to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and such information is accumulated and communicated to management, including its principal executives and principal financial officers or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) and for our assessment of the effectiveness of internal control over financial reporting.
Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and Board of Directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025, based on the framework established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We have excluded Kinectrics Holdings, Inc. and its subsidiaries, acquired on May 20, 2025, from our assessment of internal control over financial reporting. Those financial statements constitute 16.3% and 7.1% of the total assets and revenues, respectively, of our consolidated financial statement amounts as of and for the year ended December 31, 2025. This assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls. Based on our assessment under the criteria described above, management has concluded that our internal control over financial reporting was effective as of December 31, 2025. Deloitte & Touche LLP has issued an attestation report on our internal control over financial reporting as of December 31, 2025, and their report is included in this Item 9A.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended December 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
94
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of BWX Technologies, Inc.:
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of BWX Technologies, Inc. and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated February 23, 2026, expressed an unqualified opinion on those financial statements.
As described in Management's Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Kinectrics, Inc., which was acquired on May 20, 2025, and whose financial statements constitute 16.3% and 7.1% of the total assets and revenues, respectively, of the consolidated financial statement amounts as of and for the year ended December 31, 2025. Accordingly, our audit did not include the internal control over financial reporting at Kinectrics, Inc..
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and2
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/S/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
February 23, 2026
95
Item 9B. OTHER INFORMATION
Rule 10b5-1 Trading Arrangements
During the three months ended December 31, 2025, no director or officer of the Company adopted terminated
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item with respect to directors and executive officers is incorporated by reference to the material appearing under the headings "Election of Directors" and "Named Executive Profiles" in the Proxy Statement for our 2026 Annual Meeting of Stockholders. The information required by this item with respect to our Code of Business Conduct and delinquent Section 16(a) reports, if any, is incorporated by reference to the material appearing under the headings "Code of Business Conduct" and "Delinquent Section 16(a) Reports" (if applicable) in the Proxy Statement for our 2026 Annual Meeting of Stockholders. The information required by this item with respect to the audit committee financial experts is incorporated by reference to the material under the heading "Corporate Governance – Board Meetings and Committees" in the Proxy Statement for our 2026 Annual Meeting of Stockholders. The information required by this item with respect to the Company's insider trading policies and procedures is incorporated by reference to the material under the heading "Other Compensation Policies and Practices - Insider Trading Policy" in the Proxy Statement for our 2026 Annual Meeting of Stockholders.
Item 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference to the material appearing under the headings "Compensation Discussion and Analysis," "Compensation of Directors," "Compensation of Executive Officers," "Compensation Committee Interlocks and Insider Participation", "Corporate Governance – Board Meetings and Committees," and "Compensation Committee Report" and "Other Compensation Policies and Practices - Timing of Stock Awards" in the Proxy Statement for our 2026 Annual Meeting of Stockholders.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference to the material appearing under the headings "Equity Compensation Plan Information" and "Security Ownership of Certain Beneficial Owners" in the Proxy Statement for our 2026 Annual Meeting of Stockholders.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by this item is incorporated by reference to the material appearing under the headings "Corporate Governance – Director Independence" and "Certain Relationships and Related Transactions" in the Proxy Statement for our 2026 Annual Meeting of Stockholders.
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Our independent registered public accounting firm is Deloitte & Touche LLP , Charlotte, NC , PCAOB ID: 34 .
The information required by this item is incorporated by reference to the material appearing under the heading "Ratification of Appointment of Independent Registered Public Accounting Firm for Year Ending December 31, 2026" in the Proxy Statement for our 2026 Annual Meeting of Stockholders.
97
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this Report or incorporated by reference:
1.CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2025 and 2024
Consolidated Statements of Income for the Years Ended December 31, 2025, 2024 and 2023
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2025, 2024 and 2023
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2025, 2024 and 2023
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023
Notes to Consolidated Financial Statements for the Years Ended December 31, 2025, 2024 and 2023
2.CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made of the applicable regulations of the SEC have been omitted because they are not required under the relevant instructions or because the required information is included in the financial statements or the related footnotes contained in this Report.
3.EXHIBITS
| Exhibit Number | Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 3.3 | ||||||||
| 4.1 | ||||||||
| 4.2 | ||||||||
| 4.3 | ||||||||
| 4.4 | ||||||||
| 4.5 | ||||||||
| 4.6 | ||||||||
| 4.7 | ||||||||
98
| Exhibit Number | Description | |||||||
| 4.8 | ||||||||
| 4.9 | ||||||||
| 4.10 | ||||||||
| 4.11 | Supplemental Indenture No. 3, dated as of February 10, 2025, between BWX Technologies, Inc., BWXT Ordnance Tennessee, Inc. and U.S. Bank Trust Company, National Association, as a Trustee under the Indenture, dated as of June 12, 2020 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 (File No. 1-34568)). | |||||||
| 4.12 | ||||||||
| 4.13 | ||||||||
| 10.1 | ||||||||
| 10.2* | ||||||||
| 10.3* | ||||||||
| 10.4* | ||||||||
| 10.5* | ||||||||
| 10.6* | ||||||||
| 10.7* | ||||||||
| 10.8* | ||||||||
| 10.9* | ||||||||
| 10.10* | ||||||||
99
| Exhibit Number | Description | |||||||
| 10.11* | ||||||||
| 10.12* | ||||||||
| 10.13* | ||||||||
| 10.14* | ||||||||
| 10.15* | ||||||||
| 10.16* | ||||||||
| 10.17* | ||||||||
| 10.18* | ||||||||
| 10.19* | ||||||||
| 10.20* | ||||||||
| 10.21* | ||||||||
| 10.22* | ||||||||
| 10.23* | ||||||||
| 19.1 | ||||||||
| 21.1 | ||||||||
| 23.1 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 97.1 | ||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||
100
| * | Management contract or compensatory plan or arrangement. | ||||
Item 16. FORM 10-K SUMMARY
None.
101
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BWX TECHNOLOGIES, INC. | ||||||||
| /s/ Rex D. Geveden | ||||||||
| February 23, 2026 | By: | Rex D. Geveden | ||||||
| President and Chief Executive Officer | ||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated and on the date indicated.
| Signature | Title | |||||||
| /s/ Rex D. Geveden | President, Chief Executive Officer and Director | |||||||
| Rex D. Geveden | (Principal Executive Officer) | |||||||
| /s/ Mike T. Fitzgerald | Senior Vice President and Chief Financial Officer | |||||||
| Mike T. Fitzgerald | (Principal Financial Officer and Duly Authorized Representative) | |||||||
| /s/ Kevin J. Gorman | Vice President and Chief Accounting Officer | |||||||
| Kevin J. Gorman | (Principal Accounting Officer and Duly Authorized Representative) | |||||||
| /s/ Jan A. Bertsch | Independent Board Chair | |||||||
| Jan A. Bertsch | ||||||||
| /s/ Gerhard F. Burbach | Director | |||||||
| Gerhard F. Burbach | ||||||||
| /s/ James M. Jaska | Director | |||||||
| James M. Jaska | ||||||||
| /s/ Kenneth J. Krieg | Director | |||||||
| Kenneth J. Krieg | ||||||||
| /s/ Leland D. Melvin | Director | |||||||
| Leland D. Melvin | ||||||||
| /s/ Barbara A. Niland | Director | |||||||
| Barbara A. Niland | ||||||||
| /s/ Nicole W Piasecki | Director | |||||||
| Nicole W. Piasecki | ||||||||
| /s/ John M. Richardson | Director | |||||||
| John M. Richardson | ||||||||
February 23, 2026
102