BWX Technologies Inc

Selected financial highlights are presented in the table below:

This section discusses our 2023 and 2022 results of operations and contains year-to-year comparisons between 2023 and 2022. Discussions of our 2021 results and year-to-year comparisons between 2022 and 2021 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, 2022.

Consolidated Results of Operations

Consolidated revenues increased 11.8%, or $263.5 million, to $2,496.3 million in the year ended December 31, 2023 compared to $2,232.8 million in 2022, due to increases in revenues in our Government Operations and Commercial Operations segments of $222.9 million and $39.0 million, respectively.

Consolidated operating income increased $34.5 million to $383.1 million in the year ended December 31, 2023 compared to $348.6 million in 2022. Operating income in our Government Operations and Commercial Operations segments increased $38.2 million and $10.1 million, respectively. These increases were partially offset by higher Unallocated Corporate expenses of $13.8 million.

Revenues increased 12.3%, or $222.9 million, to $2,031.3 million in the year ended December 31, 2023 compared to $1,808.5 million in 2022. The increase was driven by higher volume in the manufacture of nuclear components for U.S. Government programs, resulting in an increase of $100.0 million when compared to the prior year. Continued growth in design and engineering work executed by our advanced technologies business, particularly in the defense market, resulted in additional revenues of $61.6 million. We also experienced higher revenues associated with our uranium processing and downblending operations of $58.6 million.

Operating income increased $38.2 million to $374.7 million in the year ended December 31, 2023 compared to $336.5 million in 2022. The increase was due to the operating income impact of the changes in revenues noted above.

Revenues increased 9.1%, or $39.0 million, to $466.3 million in the year ended December 31, 2023 compared to $427.4 million in 2022. The increase was primarily related to higher levels of in-plant inspection, maintenance, modification and refurbishment services of $24.1 million and an increase in revenues in our medical radioisotopes business of $14.6 million. We also experienced higher volume in our nuclear components manufacturing and fuel handling businesses. These increases were partially offset by decreased revenues in our fuel fabrication business.

Operating income increased $10.1 million to $37.5 million in the year ended December 31, 2023 compared to $27.4 million in 2022. The increase was primarily due to the operating income impact of the changes in revenues noted above in addition to lower restructuring-related expenses when compared to the prior year. These increases were partially offset by the operating margin impact caused by a shift in our project and product line mix. In particular, our field services business experienced a considerable increase in volume associated with large scale, long-term construction projects in support of major refurbishment and plant life extension projects in Canada.

Unallocated Corporate

Unallocated Corporate expenses increased $13.8 million to $29.2 million in the year ended December 31, 2023 compared to $15.3 million in 2022. The increase was primarily due to increases in healthcare costs totaling $8.7 million in addition to higher compensation related expenses. During 2023, we undertook several initiatives to transform our current information technology infrastructure which resulted in an increase in expense of $2.1 million. These increases were partially offset by a decrease in legal and consulting costs associated with due diligence activities when compared to the prior year.

Other Income (Expense)

During the year ended December 31, 2023, other income (expense) decreased $27.5 million to a loss of $61.7 million compared to a loss of $34.2 million in 2022. 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 loss of $20.9 million during the year ended December 31, 2023 compared to a gain of $4.0 million for the year ended December 31, 2022. This was caused by a decrease in pension income of $40.6 million which was partially offset by a decrease in losses related to mark to market adjustments totaling $15.8 million. In addition, we experienced an increase in interest expense of $10.6 million in 2023 when compared to the prior year due primarily to an increase in the weighted-average interest rate on outstanding borrowings under our Credit Facility, as defined below.

Provision for Income Taxes

For the year ended December 31, 2023, our provision for income taxes decreased $0.7 million to $75.1 million, while income before provision for income taxes increased $7.0 million to $321.4 million when compared to the prior year. Our effective tax rate was 23.4% for the year ended December 31, 2023 compared to 24.1% for the year ended December 31, 2022. Our effective tax rates for the years ended December 31, 2023 and 2022 were higher than the U.S. corporate income tax rate of 21% primarily due to state income taxes within the U.S. and the unfavorable rate differential associated with our Canadian earnings.

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