UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________________________________________________________________________

FORM 10-Q

_________________________________________________________________________________________________________________________________



(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2019~~March 31, 2020.



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File No. 001-34658

BWX TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)



Delaware			80-0558025
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

800 Main Street, 4th Floor
	Lynchburg,	Virginia	24504
(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
Common Stock, $0.01 par value	BWXT	New York Stock Exchange

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.



Large accelerated filer	☒	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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant's common stock outstanding at ~~October 31, 2019~~April 30, 2020 was ~~95,250,333.~~95,228,613.

BWX TECHNOLOGIES, INC.

INDEX – FORM 10-Q




		PAGE
PART I – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets
	~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 (Unaudited)	2
	Condensed Consolidated Statements of Income
	Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income
	Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)	5
	Condensed Consolidated Statements of Stockholders' Equity
	Three Months Ended March 31, ~~June 30 and September 30, 2019~~2020 and 2018 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows
	~~Nine~~Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)	87
	Notes to Condensed Consolidated Financial Statements	98
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2219
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3128
Item 4.	Controls and Procedures	3128

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	3329
Item 1A.	Risk Factors	3329
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
~~Item 5.~~	~~Other Information~~	3329
Item 6.	Exhibits	3430

Signatures		3531

PART I

FINANCIAL INFORMATION


Item 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS


	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
	(Unaudited) (In thousands)				(Unaudited) (In thousands)
Current Assets:
Cash and cash equivalents	$	13,641	$	29,871	$	77,627	$	86,540
Restricted cash and cash equivalents	3,524		3,834		3,066		3,056
Investments	3,618		3,597		3,694		5,843
Accounts receivable – trade, net	71,484		71,574		63,051		56,721
Accounts receivable – other	18,872		13,374		11,292		13,426
Retainages	70,294		57,885		62,385		46,670
Contracts in progress	399,002		318,454		407,854		376,037
Other current assets	41,015		43,859		37,226		41,462
Assets held for sale					20,845		—
Total Current Assets	621,450		542,448		687,040		629,755
Property, Plant and Equipment	1,233,151		1,132,392
Less accumulated depreciation	719,151		693,153
Net Property, Plant and Equipment	514,000		439,239
Property, Plant and Equipment, Net					594,157		580,241
Investments	9,333		7,382		6,291		7,620
Goodwill	277,078		274,082		271,593		275,502
Deferred Income Taxes	60,901		63,908		55,129		58,689
Investments in Unconsolidated Affiliates	70,963		63,746		71,754		70,116
Intangible Assets	191,318		228,676		185,678		191,392
Other Assets	81,377		35,615		94,961		95,598
TOTAL	$	1,826,420	$	1,655,096	$	1,966,603	$	1,908,913

See accompanying notes to condensed consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY


	September 30, 2019			December 31, 2018			March 31, 2020			December 31, 2019
	(Unaudited) (In thousands, except share and per share amounts)						(Unaudited) (In thousands, except share and per share amounts)
Current Liabilities:
Current maturities of long-term debt	$	14,535		$	14,227		$	13,924		$	14,711
Accounts payable	122,277			114,751			123,975			170,678
Accrued employee benefits	70,450			77,386			54,190			82,640
Accrued liabilities – other	48,892			62,163			44,825			52,213
Advance billings on contracts	66,526			98,477			80,065			75,425
Accrued warranty expense	11,060			10,344			4,873			9,042
Income taxes payable							18,721			—
Liabilities associated with assets held for sale							2,585			—
Total Current Liabilities	333,740			377,348			343,158			404,709
Long-Term Debt	849,589			753,617			911,312			809,442
Accumulated Postretirement Benefit Obligation	19,082			19,236			22,066			23,259
Environmental Liabilities	90,421			86,372			80,634			80,368
Pension Liability	162,403			173,469			164,031			172,508
Other Liabilities	16,652			9,353			15,890			14,515
Commitments and Contingencies (Note 5)
Commitments and Contingencies (Note 6)
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 126,508,355 and 125,871,866 shares at September 30, 2019 and December 31, 2018, respectively	1,265			1,259
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 126,888,659 and 126,579,285 shares at March 31, 2020 and December 31, 2019, respectively							1,269			1,266
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued	—			—			—			—
Capital in excess of par value	128,876			115,725			138,500			134,069
Retained earnings	1,299,279			1,166,762			1,401,628			1,344,383
Treasury stock at cost, 31,258,239 and 30,625,074 shares at September 30, 2019 and December 31, 2018, respectively	(1,067,622		)	(1,037,795		)
Accumulated other comprehensive income	(7,322		)	(10,289		)
Treasury stock at cost, 31,660,046 and 31,266,670 shares at March 31, 2020 and December 31, 2019, respectively							(1,093,240		)	(1,068,164		)
Accumulated other comprehensive income (loss)							(18,645		)	(7,448		)
Stockholders' Equity – BWX Technologies, Inc.	354,476			235,662			429,512			404,106
Noncontrolling interest	57			39			—			6
Total Stockholders' Equity	354,533			235,701			429,512			404,112
TOTAL	$	1,826,420		$	1,655,096		$	1,966,603		$	1,908,913

See accompanying notes to condensed consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
	(Unaudited) (In thousands, except share and per share amounts)												(Unaudited) (In thousands, except share and per share amounts)
Revenues	$	506,000		$	425,507		$	1,393,685		$	1,321,891		$	542,208		$	416,454
Costs and Expenses:
Cost of operations	357,732			326,314			999,390			971,887			392,443			303,635
Research and development costs	5,125			3,959			15,631			11,673			4,603			5,174
Losses (gains) on asset disposals and impairments, net	(6		)	243			145			(2		)
Selling, general and administrative expenses	52,561			53,919			158,296			159,199			52,958			51,683
Total Costs and Expenses	415,412			384,435			1,173,462			1,142,757			450,004			360,492
Equity in Income of Investees	7,874			9,323			22,418			22,698			6,063			7,682
Operating Income	98,462			50,395			242,641			201,832			98,267			63,644
Other Income (Expense):
Interest income	232			1,121			784			2,340			231			415
Interest expense	(8,858		)	(7,925		)	(27,103		)	(19,354		)	(7,967		)	(8,703		)
Other – net	4,670			40,968			18,795			63,984			7,917			7,521
Total Other Income (Expense)	(3,956		)	34,164			(7,524		)	46,970			181			(767		)
Income before Provision for Income Taxes	94,506			84,559			235,117			248,802			98,448			62,877
Provision for Income Taxes	19,508			6,482			52,009			43,578			22,828			13,767
Net Income	$	74,998		$	78,077		$	183,108		$	205,224		$	75,620		$	49,110
Net Income Attributable to Noncontrolling Interest	(188		)	(158		)	(442		)	(201		)	(121		)	(132		)
Net Income Attributable to BWX Technologies, Inc.	$	74,810		$	77,919		$	182,666		$	205,023		$	75,499		$	48,978
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc.	$	0.78		$	0.78		$	1.92		$	2.06		$	0.79		$	0.51
Diluted:
Net Income Attributable to BWX Technologies, Inc.	$	0.78		$	0.78		$	1.91		$	2.04		$	0.79		$	0.51
Shares used in the computation of earnings per share (Note 9):
Shares used in the computation of earnings per share (Note 10):
Basic	95,420,626			99,421,031			95,344,349			99,542,933			95,412,351			95,255,109
Diluted	95,811,198			100,420,766			95,769,919			100,501,597			95,756,372			95,821,354

See accompanying notes to condensed consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
	(Unaudited) (In thousands)												(Unaudited) (In thousands)
Net Income	$	74,998		$	78,077		$	183,108		$	205,224		$	75,620		$	49,110
Other Comprehensive Income (Loss):
Currency translation adjustments	(2,535		)	2,008			2,703			(4,725		)	(11,940		)	943
Derivative financial instruments:
Unrealized (losses) gains arising during the period, net of tax benefit (provision) of $79, $24, $469 and $(5), respectively	(248		)	(39		)	(1,323		)	7
Reclassification adjustment for gains included in net income, net of tax provision of $26, $7, $5 and $16, respectively	(72		)	(26		)	(10		)	(41		)
Amortization of benefit plan costs, net of tax benefit of $(130), $(78), $(421) and $(286), respectively	519			360			1,523			1,145
Unrealized gains (losses) arising during the period, net of tax (provision) benefit of $(109) and $164, respectively													313			(441		)
Reclassification adjustment for losses (gains) included in net income, net of tax (benefit) provision of $(138) and $49, respectively													420			(141		)
Amortization of benefit plan costs, net of tax benefit of $(167) and $(136), respectively													610			511
Investments:
Unrealized losses arising during the period, net of tax benefit (provision) of $0, $270, $(10) and $270, respectively	(54		)	(388		)	(3		)	(432		)
Reclassification adjustment for losses included in net income, net of tax provision of $0, $25, $0 and $25, respectively	—			379			—			379
Unrealized (losses) gains arising during the period, net of tax provision of $(2) and $(7), respectively													(600		)	24
Other Comprehensive Income (Loss)	(2,390		)	2,294			2,890			(3,667		)	(11,197		)	896
Total Comprehensive Income	72,608			80,371			185,998			201,557			64,423			50,006
Comprehensive Income Attributable to Noncontrolling Interest	(188		)	(158		)	(442		)	(201		)	(121		)	(132		)
Comprehensive Income Attributable to BWX Technologies, Inc.	$	72,420		$	80,213		$	185,556		$	201,356		$	64,302		$	49,874

See accompanying notes to condensed consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Common Stock
Capital In
Excess of
Par Value

Accumulated
Other
Comprehensive
Income (Loss)

Total
Stockholders'
Equity
Shares
Par
Value

Retained
Earnings

Treasury
Stock

Stockholders'
Equity

Noncontrolling
Interest

(In thousands, except share and per share amounts)
Balance December 31, 2018 125,871,866
$ 1,259
$ 115,725
$ 1,166,762
$ (10,289 ) $ (1,037,795 ) $ 235,662
$ 39
$ 235,701
Recently adopted accounting standards —
—
—
(1,219 ) 77
—
(1,142 ) —
(1,142 )
Net income —
—
—
48,978
—
—
48,978
132
49,110
Dividends declared ($0.17 per share) —
—
—
(16,323 ) —
—
(16,323 ) —
(16,323 )
Currency translation adjustments —
—
—
—
943
—
943
—
943
Derivative financial instruments —
—
—
—
(582 ) —
(582 ) —
(582 )
Defined benefit obligations —
—
—
—
511
—
511
—
511
Available-for-sale investments —
—
—
—
24
—
24
—
24
Exercises of stock options 58,655
1
1,275
—
—
—
1,276
—
1,276
Shares placed in treasury —
—
—
—
—
(29,027 ) (29,027 ) —
(29,027 )
Stock-based compensation charges 449,275
4
2,525
—
—
—
2,529
—
2,529
Distributions to noncontrolling interests —
—
—
—
—
—
—
(146 ) (146 )
Balance March 31, 2019 (unaudited) 126,379,796
$ 1,264
$ 119,525
$ 1,198,198
$ (9,316 ) $ (1,066,822 ) $ 242,849
$ 25
$ 242,874
Net income —
—
—
58,878
—
—
58,878
122
59,000
Dividends declared ($0.17 per share) —
—
—
(16,301 ) —
—
(16,301 ) —
(16,301 )
Currency translation adjustments —
—
—
—
4,295
—
4,295
—
4,295
Derivative financial instruments —
—
—
—
(431 ) —
(431 ) —
(431 )
Defined benefit obligations —
—
—
—
493
—
493
—
493
Available-for-sale investments —
—
—
—
27
—
27
—
27
Exercises of stock options 32,023
—
757
—
—
—
757
—
757
Shares placed in treasury —
—
—
—
—
(260 ) (260 ) —
(260 )
Stock-based compensation charges 4,927
—
3,823
—
—
—
3,823
—
3,823
Distributions to noncontrolling interests —
—
—
—
—
—
—
(128 ) (128 )
Balance June 30, 2019 (unaudited) 126,416,746
$ 1,264
$ 124,105
$ 1,240,775
$ (4,932 ) $ (1,067,082 ) $ 294,130
$ 19
$ 294,149
Net income —
—
—
74,810
—
—
74,810
188
74,998
Dividends declared ($0.17 per share) —
—
—
(16,306 ) —
—
(16,306 ) —
(16,306 )
Currency translation adjustments —
—
—
—
(2,535 ) —
(2,535 ) —
(2,535 )
Derivative financial instruments —
—
—
—
(320 ) —
(320 ) —
(320 )
Defined benefit obligations —
—
—
—
519
—
519
—
519
Available-for-sale investments —
—
—
—
(54 ) —
(54 ) —
(54 )
Exercises of stock options 86,888
1
1,984
—
—
—
1,985
—
1,985
Shares placed in treasury —
—
—
—
—
(540 ) (540 ) —
(540 )
Stock-based compensation charges 4,721
—
2,787
—
—
—
2,787
—
2,787
Distributions to noncontrolling interests —
—
—
—
—
—
—
(150 ) (150 )
Balance September 30, 2019 (unaudited) 126,508,355
$ 1,265
$ 128,876
$ 1,299,279
$ (7,322 ) $ (1,067,622 ) $ 354,476
$ 57
$ 354,533


	Common Stock			Capital In Excess of Par Value							Accumulated Other Comprehensive Income (Loss)															Total Stockholders' Equity				Common Stock				Capital In Excess of Par Value						Accumulated Other Comprehensive Income (Loss)															Total Stockholders' Equity
	Shares	Par Value					Retained Earnings				Accumulated Other Comprehensive Income (Loss)			Treasury Stock				Stockholders' Equity				Noncontrolling Interest				Total Stockholders' Equity			Shares		Par Value			Capital In Excess of Par Value		Retained Earnings				Accumulated Other Comprehensive Income (Loss)			Treasury Stock				Stockholders' Equity				Noncontrolling Interest				Total Stockholders' Equity
		(In thousands, except share and per share amounts)																														(In thousands, except share and per share amounts)
Balance December 31, 2017	125,381,591	$	1,254	Capital In Excess of Par Value	$	98,843			$	990,652		$	9,454			$	(814,809	)		$	285,394			$	363		$	285,757
Recently adopted accounting standards	—	—		—				13,311			(3,385		)		—				9,926				—			9,926
Balance December 31, 2019																														126,579,285		$	1,266	$	134,069		$	1,344,383		$	(7,448	)		$	(1,068,164	)		$	404,106			$	6		$	404,112
Net income	—	—		—				66,441			—				—				66,441				(28		)	66,413				—		—		—			75,499			—				—				75,499				121			75,620
Dividends declared ($0.16 per share)	—	—		—				(16,174		)	—				—				(16,174		)		—			(16,174		)
Dividends declared ($0.19 per share)																														—		—		—			(18,254		)	—				—				(18,254		)		—			(18,254		)
Currency translation adjustments	—	—		—				—			(3,124		)		—				(3,124		)		—			(3,124		)		—		—		—			—			(11,940		)		—				(11,940		)		—			(11,940		)
Derivative financial instruments	—	—		—				—			94				—				94				—			94				—		—		—			—			733				—				733				—			733
Defined benefit obligations	—	—		—				—			322				—				322				—			322				—		—		—			—			610				—				610				—			610
Available-for-sale investments	—	—		—				—			(66		)		—				(66		)		—			(66		)		—		—		—			—			(600		)		—				(600		)		—			(600		)
Exercises of stock options	159,126	1		3,806				—			—				—				3,807				—			3,807				56,431		1		1,331			—			—				—				1,332				—			1,332
Shares placed in treasury	—	—		—				—			—				(5,940		)		(5,940		)		—			(5,940		)		—		—		—			—			—				(25,076		)		(25,076		)		—			(25,076		)
Stock-based compensation charges	181,317	2		4,459				—			—				—				4,461				—			4,461				252,943		2		3,100			—			—				—				3,102				—			3,102
Distributions to noncontrolling interests	—	—		—				—			—				—				—				(226		)	(226		)		—		—		—			—			—				—				—				(127		)	(127		)
Balance March 31, 2018 (unaudited)	125,722,034	$	1,257	$	107,108			$	1,054,230		$	3,295			$	(820,749	)		$	345,141			$	109		$	345,250
Balance March 31, 2020 (unaudited)																														126,888,659		$	1,269	$	138,500		$	1,401,628		$	(18,645	)		$	(1,093,240	)		$	429,512			$	—		$	429,512

Balance December 31, 2018																														125,871,866		$	1,259	$	115,725		$	1,166,762		$	(10,289	)		$	(1,037,795	)		$	235,662			$	39		$	235,701
Recently adopted accounting standards																														—		—		—			(1,219		)	77				—				(1,142		)		—			(1,142		)
Net income	—	—		—				60,663			—				—				60,663				71			60,734				—		—		—			48,978			—				—				48,978				132			49,110
Dividends declared ($0.16 per share)	—	—		—				(16,088		)	—				—				(16,088		)		—			(16,088		)
Dividends declared ($0.17 per share)																														—		—		—			(16,323		)	—				—				(16,323		)		—			(16,323		)
Currency translation adjustments	—	—		—				—			(3,609		)		—				(3,609		)		—			(3,609		)		—		—		—			—			943				—				943				—			943
Derivative financial instruments	—	—		—				—			(63		)		—				(63		)		—			(63		)		—		—		—			—			(582		)		—				(582		)		—			(582		)
Defined benefit obligations	—	—		—				—			463				—				463				—			463				—		—		—			—			511				—				511				—			511
Available-for-sale investments	—	—		—				—			22				—				22				—			22				—		—		—			—			24				—				24				—			24
Exercises of stock options	23,394	—		517				—			—				—				517				—			517				58,655		1		1,275			—			—				—				1,276				—			1,276
Shares placed in treasury	—	—		—				—			—				(77		)		(77		)		—			(77		)		—		—		—			—			—				(29,027		)		(29,027		)		—			(29,027		)
Stock-based compensation charges	2,643	—		1,294				—			—				—				1,294				—			1,294				449,275		4		2,525			—			—				—				2,529				—			2,529
Distributions to noncontrolling interests	—	—		—				—			—				—				—				(126		)	(126		)		—		—		—			—			—				—				—				(146		)	(146		)
Balance June 30, 2018 (unaudited)	125,748,071	$	1,257	$	108,919			$	1,098,805		$	108			$	(820,826	)		$	388,263			$	54		$	388,317
Net income	—	—		—				77,919			—				—				77,919				158			78,077
Dividends declared ($0.16 per share)	—	—		—				(16,032		)	—				—				(16,032		)		—			(16,032		)
Currency translation adjustments	—	—		—				—			2,008				—				2,008				—			2,008
Derivative financial instruments	—	—		—				—			(65		)		—				(65		)		—			(65		)
Defined benefit obligations	—	—		—				—			360				—				360				—			360
Available-for-sale investments	—	—		—				—			(9		)		—				(9		)		—			(9		)
Exercises of stock options	25,166	1		617				—			—				—				618				—			618
Shares placed in treasury	—	—		—				—			—				(63,374		)		(63,374		)		—			(63,374		)
Stock-based compensation charges	23,434	—		2,764				—			—				—				2,764				—			2,764
Distributions to noncontrolling interests	—	—		—				—			—				—				—				(163		)	(163		)
Balance September 30, 2018 (unaudited)	125,796,671	$	1,258	$	112,300			$	1,160,692		$	2,402			$	(884,200	)		$	392,452			$	49		$	392,501
Balance March 31, 2019 (unaudited)																														126,379,796		$	1,264	$	119,525		$	1,198,198		$	(9,316	)		$	(1,066,822	)		$	242,849			$	25		$	242,874

See accompanying notes to condensed consolidated financial statements.

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
	(Unaudited) (In thousands)						(Unaudited) (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	183,108		$	205,224		$	75,620		$	49,110
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	46,028			43,692			15,614			15,122
Income of investees, net of dividends	(8,642		)	(8,471		)	(1,929		)	(2,960		)
Gain on forward contracts	—			(4,743		)
Recognition of debt issuance costs from Former Credit Facility	—			2,441
Provision for deferred taxes	—			38,685
Recognition of losses (gains) for pension and postretirement plans	1,944			(33,699		)
Recognition of losses for pension and postretirement plans							777			647
Stock-based compensation expense	9,139			8,519			3,102			2,529
Other, net							283			(1,663		)
Changes in assets and liabilities:
Accounts receivable	3,075			23,096			(2,092		)	5,812
Accounts payable	18,124			2,061			(21,158		)	1,612
Retainages	(12,341		)	(19,712		)	(15,760		)	(13,949		)
Contracts in progress and advance billings on contracts	(111,660		)	(35,049		)	(35,941		)	(43,735		)
Income taxes	(5,130		)	(46,511		)	20,332			7,559
Accrued and other current liabilities	(15,046		)	3,344			(8,073		)	(10,748		)
Pension liabilities, accrued postretirement benefit obligations and employee benefits	(21,608		)	(184,898		)	(36,761		)	(25,876		)
Other, net	4,010			(2,420		)	(461		)	(1,183		)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	91,001			(8,441		)
NET CASH USED IN OPERATING ACTIVITIES							(6,447		)	(17,723		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(122,629		)	(60,488		)	(64,768		)	(44,519		)
Acquisition of business	—			(212,993		)	(16,174		)	—
Purchases of securities	(2,686		)	(3,111		)	(1,511		)	(1,786		)
Sales and maturities of securities	2,706			3,378			3,680			1,800
Investments, net of return of capital, in equity method investees	—			(9,037		)
Other, net	208			5,242
NET CASH USED IN INVESTING ACTIVITIES	(122,401		)	(277,009		)	(78,773		)	(44,505		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	587,500			901,300			214,000			212,500
Repayments of long-term debt	(498,363		)	(624,987		)	(97,607		)	(113,457		)
Payment of debt issuance costs	—			(9,443		)	(1,340		)	—
Repurchases of common shares	(20,000		)	(62,558		)	(20,000		)	(20,000		)
Dividends paid to common shareholders	(49,167		)	(48,014		)	(18,596		)	(16,797		)
Exercises of stock options	3,133			3,511			1,254			823
Cash paid for shares withheld to satisfy employee taxes	(8,942		)	(5,402		)	(4,998		)	(8,574		)
Other, net	847			(515		)	5,068			943
NET CASH PROVIDED BY FINANCING ACTIVITIES	15,008			153,892			77,781			55,438
EFFECTS OF EXCHANGE RATE CHANGES ON CASH	(7		)	(8,464		)	(1,419		)	104
TOTAL DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS	(16,399		)	(140,022		)	(8,858		)	(6,686		)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	36,408			213,144			92,400			36,408
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	20,009		$	73,122		$	83,542		$	29,722
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	35,342		$	13,325		$	14,668		$	14,767
Income taxes (net of refunds)	$	57,179		$	51,779		$	1,327		$	6,191
SCHEDULE OF NON-CASH INVESTING ACTIVITY:
Accrued capital expenditures included in accounts payable	$	18,199		$	13,457		$	15,433		$	11,249

See accompanying notes to condensed consolidated financial statements.

BWX TECHNOLOGIES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER 30, 2019~~MARCH 31, 2020

(UNAUDITED)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

We have presented the condensed consolidated financial statements of BWX Technologies, Inc. ("BWXT" or the "Company") in U.S. dollars in accordance with the interim reporting requirements of Form 10-Q, Rule 10-01 of Regulation S-X and accounting principles generally accepted in the United States ("GAAP"). Certain financial information and disclosures normally included in our financial statements prepared annually in accordance with GAAP have been condensed or omitted. Readers of these financial statements should, therefore, refer to the consolidated financial statements and notes in our annual report on Form 10-K for the year ended December 31, ~~2018~~2019 (our ~~"2018~~"2019 10-K"). We have included all adjustments, in the opinion of management, consisting only of normal recurring adjustments, necessary for a fair presentation.

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 have reclassified certain amounts previously reported to conform to the presentation at ~~September 30, 2019~~March 31, 2020 and for the three ~~and nine~~ months ended ~~September 30, 2019 primarily related to the adoption of new accounting standards.~~March 31, 2020. We present the notes to our condensed 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 3 reportable segments: Nuclear Operations Group, Nuclear Power Group and Nuclear Services Group. Our reportable segments are further described as follows:

Our Nuclear Operations Group segment manufactures naval nuclear reactors for the U.S. Naval Nuclear Propulsion Program for use in submarines and aircraft carriers. Through this segment, we own and operate manufacturing facilities located in Lynchburg, Virginia; Barberton, Ohio; Mount Vernon, Indiana; Euclid, Ohio; and Erwin, Tennessee. The Lynchburg operations fabricate fuel-bearing precision components that range in weight from a few grams to hundreds of tons. 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. The Barberton and Mount Vernon locations specialize in the design and manufacture of heavy components inclusive of development and fabrication activities for submarine missile launch tubes. The Euclid facility fabricates electro-mechanical equipment and performs design, manufacturing, inspection, assembly and testing activities. Fuel for the naval nuclear reactors is provided by Nuclear Fuel Services, Inc. ("NFS"), one of our wholly owned subsidiaries. Located in Erwin, NFS also downblends Cold War-era government stockpiles of high-enriched uranium into material suitable for further processing into commercial nuclear reactor fuel.

Our Nuclear Power Group 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. BWXT has supplied the nuclear industry with more than 1,300 large, heavy components worldwide and is 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 is also a leading global manufacturer and supplier of critical medical radioisotopes and radiopharmaceuticals for research, diagnostic and therapeutic uses. ~~See Note 2 for information about a 2018 acquisition related to this segment.~~

Our Nuclear Services Group segment provides various services to the U.S. Government and the commercial nuclear industry. Services provided to the U.S. Government include 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 ("NNSA"), the Office of Nuclear Energy, the Office of Science and the Office of Environmental

Management, and NASA. Through this segment we deliver services and management solutions to nuclear and high-consequence operations. A significant portion of this segment's operations are conducted through joint ventures.

Our Nuclear Services Group segment is also engaged in inspection and maintenance services for the commercial nuclear industry primarily in the U.S. These services include steam generator, heat exchanger and balance of plant inspection and servicing as well as high pressure water lancing, non-destructive examination and the development of customized tooling solutions. This segment also offers complete advanced nuclear fuel and reactor design and engineering, licensing and manufacturing services for new advanced nuclear reactors and other nuclear technologies.

See Note 89 for financial information about our segments. Operating results for the three ~~and nine~~ months ended ~~September 30, 2019~~March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2019.~~2020. For further information, refer to the consolidated financial statements and notes included in our ~~2018~~2019 10-K.

Recently Adopted Accounting Standards

On January 1, ~~2019,~~2020, we adopted the update to the Financial Accounting Standards Board ("FASB") Topic ~~Leases~~Financial Instruments – Credit Losses. This update requires ~~that a lessee~~entities to recognize on its balance sheets the assets and liabilities for all leases with lease terms of more than 12 months, along with additional qualitative and quantitative disclosures. We adopted this update using the modified retrospective method, which resultedexpected credit losses immediately in the ~~recognition~~financial statements. We considered our customer base, credit loss history and expected loss rate in our evaluation of right-of use assets totaling $45.1 million and lease liabilities totaling $11.9 million. The difference between the right-of-use assets and lease liabilities of $33.2 million was primarily the result of reclassifications from Intangible Assets of favorable leases related to recent acquisitions. In addition, we elected the package of practical expedients permitted under the transition guidance, which allowed us to carry forward our historical lease classifications, among other things.expected credit losses. The adoption of the provisions in this update did not have an impact on our ~~condensed consolidated statements~~financial position, results of operations or cash flows.

On January 1, 2020, we adopted the update to the FASB Topic Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This update simplifies the accounting for goodwill impairment by eliminating the second step from the goodwill impairment test. Goodwill impairment will now be determined by comparing the fair value of a reporting unit with its carrying amount. The adoption of the provisions in this update did not have an impact on our financial position, results of operations or cash flows.

In December 2019, the FASB issued an update to the FASB Topic Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This update simplifies various aspects related to the accounting for income taxes by eliminating certain exceptions to the general principles in Topic 740, simplifies when companies recognize deferred taxes in an interim period and clarifies certain aspects of the current guidance to promote consistent application. We elected to early adopt this update effective January 1, 2020, which did not have a material impact on our financial position, results of operations or cash flows.

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 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. 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 Nuclear Power Group 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.

~~On January 1, 2019, certain of our joint ventures within our Nuclear Services Group segment adopted the provisions of FASB Topic~~ ~~Revenue from Contracts with Customers. This resulted in a decrease to Investments in Unconsolidated Affiliates of $1.1 million with an offsetting decrease to Retained earnings on our condensed consolidated balance sheet.~~

Provision for Income Taxes

We are subject to federal income tax in the U.S. and Canada 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.

Our effective tax rate for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~20.6%~~23.2% as compared to ~~7.7%~~21.9% for the three months ended ~~September 30, 2018. Our effective tax rate for the nine months ended September 30, 2019 was 22.1% as compared to 17.5% for the nine months ended September 30, 2018.~~March 31, 2019. The effective tax ~~rate~~rates for the three months ended ~~September 30,~~March 31, 2020 and 2019 was lower than the U.S. corporate income tax rate of 21% primarily due to state tax planning initiatives finalized in the quarter. The effective tax rate for the nine months ended September 30, 2019 waswere 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. Our effective tax rates for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were

favorably impacted by benefits recognized for excess tax benefits related to employee share-based payments of ~~$2.0~~$0.7 million and

~~$2.7~~ $1.7 million, respectively. In addition, our effective tax rates for the three and nine months ended September 30, 2018 were favorably impacted due to remeasurement adjustments to our deferred tax assets as a result of accelerating additional contributions made in August 2018 to certain of our domestic pension plans for inclusion in our 2017 U.S. tax return.

As of ~~September 30, 2019,~~March 31, 2020, we had gross unrecognized tax benefits of ~~$2.6~~$3.9 million (exclusive of interest and federal and state benefits), ~~$2.1 million~~all of which would reduce our effective tax rate if recognized.

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

At ~~September 30, 2019,~~March 31, 2020, we had restricted cash and cash equivalents totaling ~~$6.4~~$5.9 million, $2.8 million of which was held for future decommissioning of facilities (which is included in Other Assets on our condensed consolidated balance sheets) and ~~$3.5~~$3.1 million of which was held to meet reinsurance reserve requirements of our captive insurer.

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents on our condensed consolidated balance sheets to the totals presented on our condensed consolidated statement of cash flows:


	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
	(In thousands)				(In thousands)
Cash and cash equivalents	$	13,641	$	29,871	$	77,627	$	86,540
Restricted cash and cash equivalents	3,524		3,834		3,066		3,056
Restricted cash and cash equivalents included in Other Assets	2,844		2,703		2,849		2,804
Total cash and cash equivalents and restricted cash and cash equivalents as presented on our condensed consolidated statement of cash flows	$	20,009	$	36,408	$	83,542	$	92,400

Inventories

At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, Other current assets included inventories totaling ~~$17.8~~$11.6 million and ~~$16.0~~$17.1 million, respectively, consisting entirely of raw materials and supplies.

~~Leases~~

~~We lease certain manufacturing facilities, office space and equipment under operating leases with terms of one to 20 years. Certain of the leases include options to renew~~Assets Held for periods of one to 10 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 Other Assets on our condensed consolidated balance sheet. Our current lease liabilities are included in Accrued liabilities – other, and our noncurrent lease liabilities are included in Other Liabilities on our condensed consolidated balance sheet. 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.Sale

During the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, we ~~recognized lease expense~~committed to a plan to sell net assets totaling $18.3 million, which primarily consists of ~~$2.1 million~~property, plant and ~~$6.4 million~~equipment. As we believe the fair value less costs to sell for these assets held for sale exceeds their carrying amount, no adjustment to their carrying value has been recorded in the three months ended March 31, 2020.

Property, Plant and ~~paid cash of $1.8 million~~Equipment, Net

Property, plant and ~~$5.3 million for our operating leases, respectively. At September 30, 2019, our weighted-average remaining lease term was 3.9 years,~~equipment, net is stated at cost and for the purpose of measuring the present value of our lease liabilities, the weighted-average discount rate was 4.97%. The maturities of our lease liabilities at September 30, 2019 were as follows (amounts in thousands):is set forth below:

2019 $ 1,785
2020 3,239
2021 2,176
2022 1,341
2023 606
2024 170
Thereafter 1,107
Total lease payments $ 10,424
Less: interest (1,044 )
Present value of lease liabilities ⁽¹⁾
$ 9,380


~~(1)~~	~~Includes current lease liabilities of $4.2 million.~~

At September 30, 2019, our right-of-use assets totaled $42.3 million. The difference between the right-of-use assets and lease liabilities was primarily the result of our adoption of the update to the FASB Topic ~~Leases~~ ~~on January 1, 2019, which resulted in reclassifications from Intangible Assets of favorable leases related to recent acquisitions.~~

~~Future minimum payments required under operating leases that have initial or remaining noncancellable lease terms in excess of one year at December 31, 2018 were as follows (amounts in thousands):~~

2019 $ 5,650
2020 $ 2,655
2021 $ 1,969
2022 $ 1,216
2023 $ 511
Thereafter $ 1,231



	March 31, 2020		December 31, 2019
	(In thousands)
Land	$	9,338	$	8,919
Buildings	233,544		221,462
Machinery and equipment	761,300		775,997
Property under construction	271,152		265,715
	1,275,334		1,272,093
Less: Accumulated depreciation	681,177		691,852
Property, Plant and Equipment, Net	$	594,157	$	580,241

Accumulated Other Comprehensive Income (Loss)

The components of Accumulated other comprehensive income (loss) included in Stockholders' Equity are as follows:

September 30,
2019 December 31,
2018
(In thousands)
Currency translation adjustments $ 6,209
$ 3,506
Net unrealized gain (loss) on derivative financial instruments (571 ) 685
Unrecognized prior service cost on benefit obligations (12,872 ) (14,395 )
Net unrealized loss on available-for-sale investments (88 ) (85 )
Accumulated other comprehensive income $ (7,322 ) $ (10,289 )



	March 31, 2020			December 31, 2019
	(In thousands)
Currency translation adjustments	$	(3,171	)	$	8,769
Net unrealized gain on derivative financial instruments	797			64
Unrecognized prior service cost on benefit obligations	(16,004		)	(16,614		)
Net unrealized gain (loss) on available-for-sale investments	(267		)	333
Accumulated other comprehensive income (loss)	$	(18,645	)	$	(7,448	)

~~Upon adopting the FASB update to the Topic~~ ~~Derivatives, we reclassified $0.1 million from Retained earnings to Accumulated other comprehensive income on January 1, 2019.~~

The amounts reclassified out of Accumulated other comprehensive income (loss) by component and the affected condensed consolidated statements of income line items are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
	2019			2018			2019			2018				2020			2019
Accumulated Other Comprehensive Income (Loss) Component Recognized	(In thousands)												Line Item Presented	(In thousands)						Line Item Presented
Realized gain (loss) on derivative financial instruments	$	(130	)	$	(86	)	$	(78	)	$	(90	)	Revenues	$	(1	)	$	(12	)	Revenues
	228			119			93			147			Cost of operations	(557		)	202			Cost of operations
	98			33			15			57			Total before tax	(558		)	190			Total before tax
	(26		)	(7		)	(5		)	(16		)	Provision for Income Taxes	138			(49		)	Provision for Income Taxes
	$	72		$	26		$	10		$	41		Net Income	$	(420	)	$	141		Net Income
Amortization of prior service cost on benefit obligations	$	(649	)	$	(438	)	$	(1,944	)	$	(1,431	)	Other – net	$	(777	)	$	(647	)	Other – net
	130			78			421			286			Provision for Income Taxes	167			136			Provision for Income Taxes
	$	(519	)	$	(360	)	$	(1,523	)	$	(1,145	)	Net Income	$	(610	)	$	(511	)	Net Income
Realized loss on investments	$	—		$	(354	)	$	—		$	(354	)	Other – net
	—			(25		)	—			(25		)	Provision for Income Taxes
	$	—		$	(379	)	$	—		$	(379	)	Net Income
Total reclassification for the period	$	(447	)	$	(713	)	$	(1,513	)	$	(1,483	)		$	(1,030	)	$	(370	)

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 denominated in foreign currencies. We record these contracts at fair value on our condensed consolidated balance sheets. Based on the hedge designation at the 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 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 condensed consolidated statements of income.

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 ~~September 30, 2019,~~March 31, 2020, we had deferred approximately ~~$0.6~~$0.8 million of net ~~losses~~gains on these derivative financial instruments. Assuming market conditions continue, we expect to recognize the majority of this amount in the next 12 months. For the three months ended March 31, 2020 and 2019, we recognized gains of $5.2 million and $1.6 million, respectively, in Other – net on our condensed consolidated statements of income associated with FX forward contracts not designated as hedges.

At ~~September 30, 2019,~~March 31, 2020, our derivative financial instruments consisted of FX forward contracts with a total notional value of ~~$62.7~~$118.2 million with maturities extending to December 2021. These instruments consist 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 credit facility.

NOTE 2 – ACQUISITIONS

~~Acquisition of Sotera Health LLC's Nordion Medical Isotope Business~~Laker Energy Products Ltd.

On ~~July 30, 2018,~~January 2, 2020, our subsidiary BWXT ~~ITG~~ Canada ~~Inc.~~Ltd. acquired ~~Sotera Health's Nordion medical isotope business (the "MI business"~~Laker Energy Products Ltd. ("Laker Energy Products") for ~~$213.0~~CAD 21.1 million ($16.2 million U.S. dollar equivalent), subject to contingent consideration of up to an additional CAD 12.0 million. ~~The MI business~~Our preliminary purchase price allocation resulted in the recognition of $8.3 million of Property, Plant and Equipment, Net, $6.4 million of Intangible Assets and $3.5 million of Goodwill. In addition, we recognized right of use assets and lease liabilities of $2.7 million. Laker Energy Products is a ~~leading~~ global ~~manufacturer and~~ supplier of ~~critical medical radioisotopes~~nuclear-grade materials and ~~radiopharmaceuticals~~precisely machined components for ~~research, diagnostic~~CANDU nuclear power utilities and therapeutic uses. Its customers include radiopharmaceutical companies, hospitals and radiopharmacies. Its primary operations are located in Kanata, Ontario, Canada and Vancouver, British Columbia, Canada. This acquisition addedemploys approximately 150 highly trained and experienced personnel, 2 specialized production centers and a uniquely licensed infrastructure. In addition to the growing portfolio of radioisotope products we acquired, the MI 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. This business140 personnel. Laker Energy Products is reported as part of our Nuclear Power Group segment.

The purchase price of the acquisition has been allocated among assets acquired and liabilities assumed at fair value, with the excess purchase price recorded as goodwill. Our purchase price allocation is as follows (amounts in thousands):

Accounts receivable – trade $ 7,732
Contracts in progress 51
Inventories 2,113
Other current assets 97
Property, plant and equipment 12,948
Goodwill 62,495
Deferred Income Taxes 3,006
Intangible assets 139,257
Total assets acquired $ 227,699
Accounts payable $ 654
Accrued employee benefits 579
Accrued liabilities – other 1,665
Environmental liabilities 2,062
Pension liability 9,746
Total liabilities assumed $ 14,706
Net assets acquired $ 212,993
Amount of tax deductible goodwill $ 53,693

~~The intangible assets included above consist of the following (dollar amounts in thousands):~~

Amount Amortization Period
Technical support agreement $ 67,500
23 years
Unpatented technology $ 33,000
23 years
Favorable operating leases $ 28,157
13-30 years
Customer relationship $ 10,600
23 years

The following unaudited pro forma financial information presents our results of operations for the three and nine months ended September 30, 2018 as if the acquisition of the MI business had occurred on January 1, 2017. The unaudited pro forma financial information below is not intended to represent or be indicative of our actual consolidated results had we completed the acquisition at January 1, 2017. This information is presented for comparative purposes only and should not be taken as representative of our future consolidated results of operations.

Three Months Ended Nine Months Ended
September 30, 2018 September 30, 2018
(In thousands, except per share amounts)
Revenues $ 429,558
$ 1,347,031
Net Income Attributable to BWX Technologies, Inc. $ 79,141
$ 206,435
Basic Earnings per Common Share $ 0.80
$ 2.07
Diluted Earnings per Common Share $ 0.79
$ 2.05

~~The unaudited pro forma results include the following pre-tax adjustments to the historical results presented above:~~

Increase in amortization expense related to timing of amortization of the fair value of identifiable intangible assets acquired of approximately $0.5 million and $3.7 million for the three and nine months ended September 30, 2018, respectively.

Additional interest expense associated with the incremental borrowings that would have been incurred to acquire the MI business as of January 1, 2017 of approximately $2.4 million for the nine months ended September 30, 2018.

~~Elimination of $0.9 million and $2.5 million in acquisition related costs recognized in the three and nine months ended September 30, 2018, respectively, that are not expected to be recurring.~~

NOTE 3 – REVENUE RECOGNITION

Disaggregated Revenues

Revenues by geographical area and customer type were as follows:


	Three Months Ended September 30, 2019									Nine Months Ended September 30, 2019									Three Months Ended March 31, 2020									Three Months Ended March 31, 2019
	Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total
	(In thousands)																		(In thousands)
United States:
Government	$	376,243	$	—	$	28,767	$	405,010		$	1,016,594	$	—	$	82,041	$	1,098,635		$	401,066	$	—	$	24,596	$	425,662		$	297,303	$	—	$	24,451	$	321,754
Non-Government	16,407		10,130		3,781		30,318			36,357		28,265		8,922		73,544			20,841		9,608		11,209		41,658			5,338		9,162		4,353		18,853
	$	392,650	$	10,130	$	32,548	$	435,328		$	1,052,951	$	28,265	$	90,963	$	1,172,179		$	421,907	$	9,608	$	35,805	$	467,320		$	302,641	$	9,162	$	28,804	$	340,607
Canada:
Non-Government	$	—	$	69,138	$	689	$	69,827		$	—	$	203,909	$	1,197	$	205,106		$	—	$	74,527	$	960	$	75,487		$	—	$	68,611	$	290	$	68,901
Other:
Non-Government	$	1,834	$	5,108	$	—	$	6,942		$	4,686	$	23,240	$	—	$	27,926		$	1,868	$	3,782	$	—	$	5,650		$	2,160	$	6,626	$	—	$	8,786
Segment Revenues	$	394,484	$	84,376	$	33,237	512,097			$	1,057,637	$	255,414	$	92,160	1,405,211			$	423,775	$	87,917	$	36,765	548,457			$	304,801	$	84,399	$	29,094	418,294
Adjustments and Eliminations							(6,097		)							(11,526		)							(6,249		)							(1,840		)
Revenues							$	506,000								$	1,393,685								$	542,208								$	416,454

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Nuclear
Operations
Group Nuclear
Power
Group Nuclear
Services
Group Total Nuclear
Operations
Group Nuclear
Power
Group Nuclear
Services
Group Total
(In thousands)
United States:
Government $ 315,744
$ —
$ 27,120
$ 342,864
$ 960,271
$ —
$ 81,175
$ 1,041,446
Non-Government 2,066
3,890
536
6,492
5,915
4,477
7,623
18,015
$ 317,810
$ 3,890
$ 27,656
$ 349,356
$ 966,186
$ 4,477
$ 88,798
$ 1,059,461
Canada:
Government $ 358
$ —
$ —
$ 358
$ 358
$ —
$ —
$ 358
Non-Government 161
65,234
611
66,006
161
212,302
2,096
214,559
$ 519
$ 65,234
$ 611
$ 66,364
$ 519
$ 212,302
$ 2,096
$ 214,917
Other:
Non-Government $ 996
$ 10,038
$ 99
$ 11,133
$ 1,391
$ 50,896
$ 101
$ 52,388
Segment Revenues $ 319,325
$ 79,162
$ 28,366
426,853
$ 968,096
$ 267,675
$ 90,995
1,326,766
Adjustments and Eliminations (1,346 ) (4,875 )
Revenues $ 425,507
$ 1,321,891

Revenues by timing of transfer of goods or services were as follows:

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Nuclear
Operations
Group Nuclear
Power
Group Nuclear
Services
Group Total Nuclear
Operations
Group Nuclear
Power
Group Nuclear
Services
Group Total
(In thousands)
Over time $ 394,407
$ 74,582
$ 33,237
$ 502,226
$ 1,057,434
$ 218,036
$ 92,160
$ 1,367,630
Point-in-time 77
9,794
—
9,871
203
37,378
—
37,581
Segment Revenues $ 394,484
$ 84,376
$ 33,237
512,097
$ 1,057,637
$ 255,414
$ 92,160
1,405,211
Adjustments and Eliminations (6,097 ) (11,526 )
Revenues $ 506,000
$ 1,393,685


	Three Months Ended September 30, 2018									Nine Months Ended September 30, 2018									Three Months Ended March 31, 2020									Three Months Ended March 31, 2019
	Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total
	(In thousands)																		(In thousands)
Over time	$	319,325	$	66,219	$	28,366	$	413,910		$	968,096	$	240,652	$	90,995	$	1,299,743		$	423,739	$	77,185	$	36,765	$	537,689		$	304,733	$	70,661	$	29,094	$	404,488
Point-in-time	—		12,943		—		12,943			—		27,023		—		27,023			36		10,732		—		10,768			68		13,738		—		13,806
Segment Revenues	$	319,325	$	79,162	$	28,366	426,853			$	968,096	$	267,675	$	90,995	1,326,766			$	423,775	$	87,917	$	36,765	548,457			$	304,801	$	84,399	$	29,094	418,294
Adjustments and Eliminations							(1,346		)							(4,875		)							(6,249		)							(1,840		)
Revenues							$	425,507								$	1,321,891								$	542,208								$	416,454

Revenues by contract type were as follows:

Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019
Nuclear
Operations
Group Nuclear
Power
Group Nuclear
Services
Group Total Nuclear
Operations
Group Nuclear
Power
Group Nuclear
Services
Group Total
(In thousands)
Fixed-Price Incentive Fee $ 302,181
$ 497
$ —
$ 302,678
$ 846,823
$ 2,078
$ —
$ 848,901
Firm-Fixed-Price 72,820
64,758
5,806
143,384
148,860
203,961
15,878
368,699
Cost-Plus Fee 19,483
591
26,830
46,904
61,622
599
75,145
137,366
Time-and-Materials —
18,530
601
19,131
332
48,776
1,137
50,245
Segment Revenues $ 394,484
$ 84,376
$ 33,237
512,097
$ 1,057,637
$ 255,414
$ 92,160
1,405,211
Adjustments and Eliminations (6,097 ) (11,526 )
Revenues $ 506,000
$ 1,393,685


	Three Months Ended September 30, 2018									Nine Months Ended September 30, 2018									Three Months Ended March 31, 2020									Three Months Ended March 31, 2019
	Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total			Nuclear Operations Group		Nuclear Power Group		Nuclear Services Group		Total
	(In thousands)																		(In thousands)
Fixed-Price Incentive Fee	$	255,944	$	3,748	$	—	$	259,692		$	763,334	$	13,365	$	—	$	776,699		$	284,374	$	492	$	—	$	284,866		$	245,487	$	273	$	—	$	245,760
Firm-Fixed-Price	38,262		58,451		4,393		101,106			137,792		177,035		15,435		330,262			113,337		70,836		11,637		195,810			39,343		61,998		6,168		107,509
Cost-Plus Fee	25,117		—		23,496		48,613			66,800		45		73,535		140,380			25,996		—		22,493		48,489			19,853		—		22,535		42,388
Time-and-Materials	2		16,963		477		17,442			170		77,230		2,025		79,425			68		16,589		2,635		19,292			118		22,128		391		22,637
Segment Revenues	$	319,325	$	79,162	$	28,366	426,853			$	968,096	$	267,675	$	90,995	1,326,766			$	423,775	$	87,917	$	36,765	548,457			$	304,801	$	84,399	$	29,094	418,294
Adjustments and Eliminations							(1,346		)							(4,875		)							(6,249		)							(1,840		)
Revenues							$	425,507								$	1,321,891								$	542,208								$	416,454

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. During the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ we recognized net favorable changes in estimates that resulted in increases in revenues of ~~$26.5~~$9.6 million and ~~$8.9~~$4.8 million, respectively. During the nine months ended September 30, 2019 and 2018, we recognized net favorable changes in estimates that resulted in increases in revenues of $47.9 million and $23.4 million, respectively. In addition, during the three and nine months ended September 30, 2018, we recognized increases in cost of operations of $12.3 million. Included in these 2018 amounts are contract adjustments resulting from rework issues related to the manufacture of non-nuclear components being produced within our Nuclear Operations Group segment. We recognized decreases in operating income of $26.7 million and $29.2 million for the three and nine months ended September 30, 2018, respectively, related to this matter. These contract adjustments resulted in a decrease in earnings per share of $0.21 and $0.23 for the three and nine months ended September 30, 2018, respectively.

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. We include in Advance billings on contracts billings that exceed accumulated contract costs and revenues ~~and costs~~ recognized over time. Amounts that are withheld on our fixed-price incentive fee contracts 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 revenues. 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 ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, our unbilled receivables increased ~~$80.0 million and our Advance billings on contracts decreased $32.0~~$32.1 million primarily as a result of ~~revenue in excess of billings on certain fixed-price incentive fee contracts within our Nuclear Operations Group segment and~~ the timing of milestone billings inon certain firm-fixed-price contracts within our Nuclear Power Group segment. Our fixed-price incentive fee contracts for our Nuclear Operations Group 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.


	September 30,		December 31,		March 31,		December 31,
	2019		2018		2020		2019
	(In thousands)				(In thousands)
Included in Contracts in progress:
Unbilled receivables	$	388,739	$	308,723	$	397,925	$	365,861
Retainages	$	70,294	$	57,885	$	62,385	$	46,670
Included in Other Assets:
Retainages	$	1,606	$	1,674	$	1,457	$	1,412
Advance billings on contracts	$	66,526	$	98,477	$	80,065	$	75,425

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2020 and 2019, we recognized ~~$7.0~~$30.2 million and ~~$57.5~~$33.8 million of revenues that were in Advance billings on contracts at December 31, ~~2018, respectively. During the three~~2019 and ~~nine months ended September 30, 2018, we recognized $4.3 million and $49.0 million of revenues that were in Advance billings on contracts at January 1,~~ 2018, 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. Of the ~~September 30, 2019~~March 31, 2020 remaining performance obligations on our contracts with customers, we expect to recognize revenues as follows:


	2019		2020		Thereafter		Total		2020		2021		Thereafter		Total
	(In approximate millions)								(In approximate millions)
Nuclear Operations Group	$	357	$	1,065	$	2,023	$	3,445	$	1,116	$	1,043	$	2,123	$	4,282
Nuclear Power Group	96		200		433		729		183		183		412		778
Nuclear Services Group	21		12		13		46		34		6		11		51
Total Remaining Performance Obligations	$	474	$	1,277	$	2,469	$	4,220	$	1,333	$	1,232	$	2,546	$	5,111

NOTE 4 – LONG-TERM DEBT

Our Long-Term Debt consists of the following:



	March 31, 2020		December 31, 2019
	(In thousands)
Secured Debt:
Senior Notes	$	400,000	$	400,000
Credit Facility	534,115		432,159
Less: Amounts due within one year	13,924		14,711
Long-Term Debt, gross	920,191		817,448
Less: Deferred debt issuance costs	8,879		8,006
Long-Term Debt	$	911,312	$	809,442

Maturities of long-term debt subsequent to March 31, 2020 are as follows: 2020 – $10.4 million; 2021 – $13.9 million; 2022 – $13.9 million; 2023 – $215.8 million; 2024 – $0.0 million; 2025 – $280.0 million; and thereafter – $400.0 million.

Credit Facility

On March 24, 2020, we entered into an Amendment No. 1 to Credit Agreement (the "Amendment"), which amended the Credit Agreement dated May 24, 2018 (the "Credit Facility") with Wells Fargo Bank, N.A., as administrative agent, and the other lenders party thereto. The Credit Facility originally provided for a $500 million senior secured revolving credit facility (the "Revolving Credit Facility"), a $50 million U.S. dollar senior secured term loan A made available to the Company (the "USD Term Loan") and a $250 million (U.S. dollar equivalent) Canadian dollar senior secured term loan A made available to BWXT Canada Ltd. (the "CAD Term Loan" and together with the USD Term Loan, the "Term Loans").

The Amendment, among other things, (1) provided additional commitments to increase the Revolving Credit Facility by $250 million, such that the Revolving Credit Facility is now $750 million; (2) extended the maturity date of the Revolving Credit Facility to March 24, 2025; (3) removed BWXT Canada Ltd. as a borrower under the Revolving Credit Facility; (4) modified the applicable margin for borrowings under the Revolving Credit Facility to be, at the Company's option, either (i) the Eurocurrency rate plus a margin ranging from 1.0% to 1.75% per year or (ii) the base rate plus a margin ranging from 0.0% to 0.75% per year, in each case depending on the Company's leverage ratio; (5) modified the commitment fee on the unused portion of the Revolving Credit Facility to range from 0.15% to 0.225% per year, depending on the Company's leverage ratio; and (6) modified the letter of credit fee with respect to each financial letter of credit and performance letter of credit issued under the Revolving Credit Facility to range from 1.0% to 1.75% and 0.75% to 1.05% per year, respectively, in each case, depending on the Company's leverage ratio.

The Term Loans are scheduled to mature on May 24, 2023, and all obligations under the Revolving Credit Facility are scheduled to mature on March 24, 2025. The proceeds of loans under the Revolving Credit Facility are available for working capital needs, permitted acquisitions and other general corporate purposes.

voluntary prepayments of the Term Loans, plus (3) additional amounts provided the Company is in compliance with a pro forma first lien leverage ratio test of less than or equal to 2.50 to 1.00.

The Company's obligations under the Credit Facility are guaranteed, subject to certain exceptions, by substantially all of the Company's present and future wholly owned domestic restricted subsidiaries. The obligations of BWXT Canada Ltd. under the CAD Term Loan are guaranteed, subject to certain exceptions, by substantially all of the Company's present and future wholly owned Canadian and domestic restricted subsidiaries.

The Credit Facility is secured by first-priority liens on certain assets owned by the Company and its subsidiary guarantors (other than its subsidiaries comprising its Nuclear Operations Group segment and a portion of its Nuclear Services Group segment); provided that (1) the Company's domestic obligations are only secured by assets and property of the domestic loan parties and (2) the obligations of BWXT Canada Ltd. and the Canadian guarantors are secured by assets and property of the Canadian guarantors and the domestic loan parties.

The Credit Facility requires interest payments on revolving loans on a periodic basis until maturity. We began making quarterly amortization payments on the Term Loans in amounts equal to 1.25% of the initial aggregate principal amount of each loan in the third quarter of 2018. We may prepay all loans under the Credit Facility at any time without premium or penalty (other than customary Eurocurrency breakage costs), subject to notice requirements.

The Credit Facility includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted leverage ratio is 4.00 to 1.00, which may be increased to 4.50 to 1.00 for up to four consecutive fiscal quarters after a material acquisition. The minimum consolidated interest coverage ratio is 3.00 to 1.00. In addition, the Credit Facility contains various restrictive covenants, including with respect to debt, liens, investments, mergers, acquisitions, dividends, equity repurchases and asset sales. As of March 31, 2020, we were in compliance with all covenants set forth in the Credit Facility.

The Term Loans bear interest at our option at either (1) the Eurocurrency rate plus a margin ranging from 1.25% to 2.0% per year or (2) the base rate or Canadian index rate, as applicable (described in the Credit Facility as the highest of (a) with respect to the base rate only, the federal funds rate plus 0.5%, (b) the one-month Eurocurrency rate plus 1.0% and (c) the administrative agent's prime rate or the Canadian prime rate, as applicable), plus, in each case, a margin ranging from 0.25% to 1.0% per year. Outstanding loans under the Revolving Credit Facility bear interest at our option at either (1) the Eurocurrency rate plus a margin ranging from 1.0% to 1.75% per year or (2) the base rate plus a margin ranging from 0.0% to 0.75% per year. We are charged a commitment fee on the unused portion of the Revolving Credit Facility, and that fee ranges from 0.15% to 0.225% per year. Additionally, we are charged a letter of credit fee of between 1.0% and 1.75% per year with respect to the amount of each financial letter of credit issued under the Credit Facility, and a letter of credit fee of between 0.75% and 1.05% per year with respect to the amount of each performance letter of credit issued under the Credit Facility. The applicable margin for loans, the commitment fee and the letter of credit fees set forth above will vary quarterly based on our leverage ratio. Based on the leverage ratio applicable at March 31, 2020, the margin for Eurocurrency rate and base rate or Canadian index rate term loans was 1.375% and 0.375%, respectively, the margin for Eurocurrency rate and base rate revolving loans was 1.25% and 0.25%, respectively, the letter of credit fee for financial letters of credit and performance letters of credit was 1.25% and 0.825%, respectively, and the commitment fee for the unused portion of the Revolving Credit Facility was 0.175%.

As of March 31, 2020, borrowings outstanding totaled $254.1 million and $280.0 million under the Term Loans and Revolving Credit Facility, respectively, and letters of credit issued under the Revolving Credit Facility totaled $65.7 million. As a result, we had $404.3 million available under the Revolving Credit Facility for borrowings or to meet letter of credit requirements as of March 31, 2020. As of March 31, 2020, the weighted-average interest rate on outstanding borrowings under our Credit Facility was 2.40%.

The Credit Facility generally includes customary events of default for a secured credit facility. Under the Credit Facility, (1) if an event of default relating to bankruptcy or other insolvency events occurs with respect to the Company, all related obligations will immediately become due and payable; (2) if any other event of default exists, the lenders will be permitted to accelerate the maturity of the related obligations outstanding; and (3) if any event of default exists, the lenders will be permitted to terminate their commitments thereunder and exercise other rights and remedies, including the commencement of foreclosure or other actions against the collateral.

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

NOTE 45 – PENSION PLANS AND POSTRETIREMENT BENEFITS

We record the service cost component of net periodic benefit cost within Operating income on our condensed consolidated statements of income. For the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ these amounts were ~~$2.1~~$3.0 million and ~~$2.5 million, respectively. For the nine months ended September 30, 2019 and 2018, these amounts were $7.3 million and $7.7~~$2.6 million, respectively. All other components of net periodic benefit cost are included in Other – net within the condensed consolidated statements of income. For the three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ these amounts were ~~$(5.3)~~$(9.5) million and ~~$(42.4) million, respectively. For the nine months ended September 30, 2019 and 2018, these amounts were $(15.8) million and $(60.1)~~$(5.2) million, respectively. Components of net periodic benefit cost included in net income were as follows:


	Pension Benefits												Other Benefits												Pension Benefits						Other Benefits
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2019			2018			2019			2018			2019			2018			2020			2019			2020			2019
	(In thousands)																								(In thousands)
Service cost	$	1,914		$	2,380		$	6,839		$	7,198		$	145		$	132		$	434		$	459		$	2,819		$	2,456		$	166		$	145
Interest cost	11,567			11,575			34,722			36,225			586			504			1,756			1,404			9,302			11,592			410			585
Expected return on plan assets	(17,490		)	(19,272		)	(52,344		)	(62,450		)	(627		)	(548		)	(1,882		)	(1,581		)	(19,364		)	(17,436		)	(672		)	(627		)
Amortization of prior service cost (credit)	727			565			2,177			1,665			(78		)	(127		)	(233		)	(234		)	825			725			(48		)	(78		)
Recognized net actuarial gain	—			(35,130		)	—			(35,130		)	—			—			—			—
Net periodic benefit (income) cost	$	(3,282	)	$	(39,882	)	$	(8,606	)	$	(52,492	)	$	26		$	(39	)	$	75		$	48		$	(6,418	)	$	(2,663	)	$	(144	)	$	25

We immediately recognize net actuarial gains and losses for our pension and postretirement benefit plans in earnings as a component of net periodic benefit cost. In July 2018, we completed the purchase of a group annuity contract to transfer certain domestic pension benefit obligations of approximately $240 million to an insurance company for approximately 1,300 retirees. As a result, we remeasured 2 of our domestic pension plans resulting in the recognition of a net actuarial gain of $35.1 million in Other – net within the condensed consolidated statements of income, which includes a $10.4 million settlement loss and a $45.5 million actuarial gain.

We made contributions to our pension and postretirement plans totaling $157.9 million during the nine months ended September 30, 2018. In August 2018, we accelerated $118.1 million of pension contributions to certain domestic pension plans in order to capture a tax benefit in our 2017 U.S. tax return due to the change in corporate tax rates.

NOTE 56 – COMMITMENTS AND CONTINGENCIES

There were no material contingencies during the period covered by this Form 10-Q. For more information regarding commitments and contingencies, refer to Note 10 to the consolidated financial statements in Part II of our ~~2018~~2019 10-K.

NOTE 67 – FAIR VALUE MEASUREMENTS

Investments

The following is a summary of our investments measured at fair value at ~~September 30, 2019:~~March 31, 2020:


	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)								(In thousands)
Equity securities
Equities	$	2,511	$	—	$	2,511	$	—
Mutual funds	5,316		—		5,316		—		$	4,962	$	—	$	4,962	$	—
Available-for-sale securities
U.S. Government and agency securities	1,991		1,991		—		—		2,315		2,315		—		—
Corporate bonds	3,050		1,423		1,627		—		2,650		1,271		1,379		—
Asset-backed securities and collateralized mortgage obligations	83		—		83		—		58		—		58		—
Total	$	12,951	$	3,414	$	9,537	$	—	$	9,985	$	3,586	$	6,399	$	—

The following is a summary of our investments measured at fair value at December 31, ~~2018:~~2019:


	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
	(In thousands)								(In thousands)
Equity securities
Equities	$	1,163	$	—	$	1,163	$	—	$	2,172	$	—	$	2,172	$	—
Mutual funds	4,694		—		4,694		—		5,685		—		5,685		—
Available-for-sale securities
U.S. Government and agency securities	2,227		2,227		—		—		2,044		2,044		—		—
Corporate bonds	2,803		1,433		1,370		—		3,483		1,855		1,628		—
Asset-backed securities and collateralized mortgage obligations	92		—		92		—		79		—		79		—
Total	$	10,979	$	3,660	$	7,319	$	—	$	13,463	$	3,899	$	9,564	$	—

We estimate the fair value of investments based on quoted market prices. For investments for which there are no quoted market prices, we derive fair values from available yield curves for investments of similar quality and terms.

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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, we had forward contracts outstanding to purchase or sell foreign currencies, primarily Canadian dollars and Euros, with a total fair value of ~~$(1.3)~~$0.3 million and ~~$0.7~~$(0.8) million, respectively.

Other Financial Instruments

We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments, as follows:

Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that we have reported in the accompanying condensed 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 5.375% senior notes due 2026 (the "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 ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the fair value of our

Senior Notes was ~~$421.0~~$389.5 million and ~~$384.9~~$423.5 million, respectively. The fair value of our remaining debt instruments approximated their carrying values at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018.~~2019.

NOTE 78 – STOCK-BASED COMPENSATION

Stock-based compensation recognized for all of our plans for the three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ totaled ~~$3.1~~$2.6 million and ~~$2.8~~$3.6 million, respectively, with associated tax benefit totaling ~~$0.5~~$0.4 million and $0.5 million, respectively. Stock-based compensation recognized for all of our plans for the nine months ended September 30, 2019 and 2018 totaled $10.9 million and $9.1 million, respectively, with associated tax benefit totaling $1.9 million and $1.7$0.6 million, respectively.

NOTE 89 – SEGMENT REPORTING

As described in Note 1, our operations are assessed based on 3 reportable segments. An analysis of our operations by reportable segment is as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
	(In thousands)												(In thousands)
REVENUES:
Nuclear Operations Group	$	394,484		$	319,325		$	1,057,637		$	968,096		$	423,775		$	304,801
Nuclear Power Group	84,376			79,162			255,414			267,675			87,917			84,399
Nuclear Services Group	33,237			28,366			92,160			90,995			36,765			29,094
Adjustments and Eliminations ⁽¹⁾	(6,097		)	(1,346		)	(11,526		)	(4,875		)
Eliminations ⁽¹⁾													(6,249		)	(1,840		)
	$	506,000		$	425,507		$	1,393,685		$	1,321,891		$	542,208		$	416,454


(1)	Segment revenues are net of the following intersegment ~~transfers and other adjustments:~~transfers:


Nuclear Operations Group Transfers	$	(1,260	)	$	(978	)	$	(3,164	)	$	(2,958	)	$	(673	)	$	(857	)
Nuclear Power Group Transfers	(73		)	(95		)	(146		)	(104		)	(129		)	(40		)
Nuclear Services Group Transfers	(4,764		)	(273		)	(8,216		)	(1,813		)	(5,447		)	(943		)
	$	(6,097	)	$	(1,346	)	$	(11,526	)	$	(4,875	)	$	(6,249	)	$	(1,840	)
OPERATING INCOME:
Nuclear Operations Group	$	93,667		$	45,580		$	226,518		$	180,283		$	90,359		$	57,625
Nuclear Power Group	8,967			9,063			36,433			38,637			8,470			12,583
Nuclear Services Group	5,516			6,494			8,577			11,182			6,400			1,571
Other	(6,948		)	(5,142		)	(19,788		)	(13,542		)	(5,359		)	(6,096		)
	$	101,202		$	55,995		$	251,740		$	216,560		$	99,870		$	65,683
Unallocated Corporate ⁽²⁾	(2,740		)	(5,600		)	(9,099		)	(14,728		)	(1,603		)	(2,039		)
Total Operating Income	$	98,462		$	50,395		$	242,641		$	201,832		$	98,267		$	63,644
Other Income (Expense):
Interest income	232			1,121			784			2,340
Interest expense	(8,858		)	(7,925		)	(27,103		)	(19,354		)
Other – net	4,670			40,968			18,795			63,984
Total Other Income (Expense)	(3,956		)	34,164			(7,524		)	46,970
Other Income (Expense)													181			(767		)
Income before Provision for Income Taxes	$	94,506		$	84,559		$	235,117		$	248,802		$	98,448		$	62,877


(2)	Unallocated corporate includes general corporate overhead not allocated to segments.

NOTE 910 – EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2019		2018		2020		2019
	(In thousands, except share and per share amounts)								(In thousands, except share and per share amounts)
Basic:
Net Income Attributable to BWX Technologies, Inc.	$	74,810	$	77,919	$	182,666	$	205,023	$	75,499	$	48,978
Weighted-average common shares	95,420,626		99,421,031		95,344,349		99,542,933		95,412,351		95,255,109
Basic earnings per common share	$	0.78	$	0.78	$	1.92	$	2.06	$	0.79	$	0.51
Diluted:
Net Income Attributable to BWX Technologies, Inc.	$	74,810	$	77,919	$	182,666	$	205,023	$	75,499	$	48,978
Weighted-average common shares (basic)	95,420,626		99,421,031		95,344,349		99,542,933		95,412,351		95,255,109
Effect of dilutive securities:
Stock options, restricted stock units and performance shares ⁽¹⁾	390,572		999,735		425,570		958,664		344,021		566,245
Adjusted weighted-average common shares	95,811,198		100,420,766		95,769,919		100,501,597		95,756,372		95,821,354
Diluted earnings per common share	$	0.78	$	0.78	$	1.91	$	2.04	$	0.79	$	0.51


(1)	At ~~September 30,~~March 31, 2020 and 2019, we excluded 99,102 and ~~2018, none of~~181,358 shares, respectively, from our ~~shares were~~diluted share calculation as their effect would have been antidilutive.


Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

The following information should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included under Item 1 of this quarterly report on Form 10-Q ("Report") and the audited consolidated financial statements and the related notes and Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our annual report on Form 10-K for the year ended December 31, ~~2018~~2019 (our ~~"2018~~"2019 10-K").

In this Report, unless the context otherwise indicates, "we," "us" and "our" mean BWX Technologies, Inc. ("BWXT" or the "Company") and its consolidated subsidiaries.

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. Forward-looking statements include those statements that express a belief, expectation or intention, as well as those that are not statements of historical fact, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of ~~1934.~~1934, as amended (the "Exchange Act"). Statements and assumptions regarding expectations and projections of specific projects, our future backlog, revenues, income and capital spending, strategic investments, acquisitions or divestitures, return of capital activities, or margin improvement initiatives or impacts of the COVID-19 pandemic 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.

We have based our forward-looking statements on information currently available to us and our current expectations, estimates and projections about our industries 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. For example, the extent to which the COVID-19 outbreak impacts our business will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the length and severity of the COVID-19 health crisis, and the actions to contain its impact, in addition to the potential recurrence or subsequent waves of COVID-19 or similar diseases. 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~~sections labeled Item 1A, "Risk Factors" of our ~~2018~~2019 10-K and of this Report, most of which are difficult to predict and many of which are beyond our control. 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, including under the heading "COVID-19 Assessment" of this Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Item 1A, "Risk Factors", and in Item 1A "Risk Factors" in our ~~2018~~2019 10-K. These factors are not necessarily all the factors that could affect us. Unpredictable or unanticipated factors we have not discussed in this Report or in our ~~2018~~2019 10-K 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.

GENERAL

We operate in three reportable segments: Nuclear Operations Group, Nuclear Power Group and Nuclear Services Group. 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 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.

Nuclear Operations Group

The revenues of our Nuclear Operations Group segment are largely a function of defense spending by the U.S. Government. Through this segment, we engineer, design and manufacture precision naval nuclear components, reactors and nuclear fuel for the DOE/NNSA's Naval Nuclear Propulsion Program. In addition, we perform development and fabrication

activities for missile launch tubes for U.S. Navy submarines. As a supplier of major nuclear components for certain U.S. Government programs, this segment is a significant participant in the defense industry.

Nuclear Power Group

Through this segment, we design and manufacture commercial nuclear steam generators, heat exchangers, pressure vessels, reactor components, ~~and~~as well as other auxiliary equipment, including containers for the storage of spent nuclear fuel and other

high-level nuclear waste. This segment is a leading supplier of nuclear fuel, fuel handling systems, tooling delivery systems, nuclear-grade materials and precisely machined components, and related services for CANDU nuclear power plants. 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. Additionally, this segment is a leading global manufacturer and supplier of critical medical radioisotopes and radiopharmaceuticals.

Our Nuclear Power Group segment's overall activity primarily depends on the demand and competitiveness of nuclear energy. A significant portion of our Nuclear Power Group segment's operations depend on the timing of maintenance and refueling outages, the cyclical nature of capital expenditures and major refurbishment and 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.

Nuclear Services Group

Our Nuclear Services Group segment provides various services to the U.S. Government and the commercial nuclear industry primarily in the U.S. The revenues and equity in income of investees under our U.S. Government contracts are largely a function of spending of the U.S. Government and the performance scores we and our consortium partners earn in managing and operating high-consequence operations at U.S. nuclear weapons sites, national laboratories and manufacturing complexes. With its specialized capabilities of full life-cycle management of special materials, facilities and technologies, we believe our Nuclear Services Group segment is well-positioned to continue to 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.

This segment is also engaged in inspection and maintenance services for the commercial nuclear industry primarily in the U.S. These services include steam generator, heat exchanger and balance of plant inspection and servicing as well as high pressure water lancing, non-destructive examination and the development of customized tooling solutions. This segment also develops technology for a variety of applications, including advanced nuclear power sources, and offers complete advanced nuclear fuel and reactor design and engineering, licensing and manufacturing services for new advanced nuclear reactors.

Acquisition of ~~Sotera Health LLC's Nordion Medical Isotope Business~~Laker Energy Products Ltd.

On ~~July 30, 2018,~~January 2, 2020, our subsidiary BWXT ~~ITG~~ Canada ~~Inc.~~Ltd. acquired ~~Sotera Health's Nordion medical isotope business (the "MI business"~~Laker Energy Products Ltd. ("Laker Energy Products"). ~~The MI business~~Laker Energy Products is a ~~leading~~ global ~~manufacturer and~~ supplier of ~~critical medical radioisotopes~~nuclear-grade materials and ~~radiopharmaceuticals~~precisely machined components for ~~research, diagnostic~~CANDU nuclear power utilities and therapeutic uses. Its customers include radiopharmaceutical companies, hospitals and radiopharmacies. Its primary operations are located in Kanata, Ontario, Canada and Vancouver, British Columbia, Canada. This acquisition addedemploys approximately 150 highly trained and experienced personnel, two specialized production centers and a uniquely licensed infrastructure. In addition to the growing portfolio of radioisotope products we acquired, the MI 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. This business140 personnel. Laker Energy Products is reported as part of our Nuclear Power Group segment.

Critical Accounting Policies and Estimates

For a summary of the critical accounting policies and estimates that we use in the preparation of our unaudited condensed consolidated financial statements, see Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our ~~2018~~2019 10-K. There have been no material changes to our critical accounting policies during the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 with the exception of ~~changes to~~the adoption of Financial Accounting Standards Board ("FASB") Topic ~~Leases~~Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment as described in the notes to the condensed consolidated financial statements in Part I of this Report.

Accounting for Contracts

On certain of our performance obligations, we recognize revenue over time. In accordance with FASB Topic Revenue from Contracts with Customers, we are required to estimate the total amount of costs on these performance obligations. As of ~~September 30, 2019,~~March 31, 2020, we have provided for the 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 revenues and costs. A principal risk on fixed-price contracts is that revenue from the customer is insufficient to 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. In some instances, we guarantee completion dates related to our projects or provide performance guarantees. Increases in costs on our fixed-price contracts could have a material adverse

impact on our consolidated results of operations, financial condition and cash flows. Alternatively, reductions in overall contract costs at completion could materially improve our consolidated results of operations, financial condition and cash flows. During the three months ended ~~September 30,~~March 31, 2020 and 2019, and 2018, we recognized net changes in estimates related to contracts that recognize revenue over time, which increased (decreased) operating income by approximately $24.9 million and $(3.4) million, respectively. During the nine months ended September 30, 2019 and 2018, we recognized net changes in estimates related to contracts that recognize revenue over time, which increased operating income by approximately ~~$48.6~~$9.6 million and ~~$11.1~~$4.8 million, respectively. ~~Included~~

COVID-19 Assessment

A global outbreak of a novel strain of coronavirus ("COVID-19") has occurred impacting over 200 countries, including the U.S. and Canada where we maintain our principal operations. Developments have been occurring rapidly with respect to the spread of COVID-19 and its impact on human health and businesses, with new and changing government actions occurring on a daily basis. As a result, we have been closely monitoring the COVID-19 pandemic and its impacts and potential impacts on our business.

We have received notifications from the U.S. and Canadian governments designating BWXT as an essential business given our roles in national security, energy production and medical manufacturing. We continue to operate our facilities and have taken numerous precautions to mitigate exposure and protect the health and well-being of our workforce. The COVID-19 pandemic did not cause a significant disruption to our operations or our supply chain in the ~~2018 amounts are contract adjustments resulting from rework issues~~first quarter of 2020.

Because developments related to the ~~manufacture~~spread of ~~non-nuclear components being produced within~~COVID-19 and its impacts have been occurring rapidly, it is difficult to predict any future impact at this time. We may experience material disruptions to demand for our products and services and our operations in the future as a result of, among other things, national, state, provincial or local government enforced quarantines, worker illness or absenteeism, and travel and other restrictions. For similar reasons, the COVID-19 pandemic may also adversely impact our supply chain and other manufacturers which could delay our receipt of essential goods and services. For example, certain services scheduled during nuclear power plant outages during which our Nuclear ~~Operations~~Power Group ~~segment.~~and Nuclear Services Group segments would operate have been rescheduled. We ~~recognized decreases~~have also experienced delays in ~~operating income~~the bidding and contracting process for our U.S. Government businesses due to COVID-19 concerns. Any number of ~~$26.7 million~~these potential risks could have a material adverse effect on our financial condition, results of operations and ~~$29.2 million~~cash flows. The extent to which the COVID-19 outbreak impacts our business will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.

See Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q for an additional discussion of risks of the three and nine months ended September 30, 2018, respectively, related to this matter. These contract adjustments resulted in a decrease in earnings per share of $0.21 and $0.23 for the three and nine months ended September 30, 2018, respectively.COVID-19 pandemic on our business.

RESULTS OF OPERATIONS – THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2019~~MARCH 31, 2020 VS. THREE ~~AND NINE~~ MONTHS ENDED ~~SEPTEMBER 30, 2018~~MARCH 31, 2019

Selected financial highlights are presented in the table below:


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
	2019			2018			$ Change			2019			2018			$ Change			2020			2019			$ Change
	(In thousands)																		(In thousands)
REVENUES:
Nuclear Operations Group	$	394,484		$	319,325		$	75,159		$	1,057,637		$	968,096		$	89,541		$	423,775		$	304,801		$	118,974
Nuclear Power Group	84,376			79,162			5,214			255,414			267,675			(12,261		)	87,917			84,399			3,518
Nuclear Services Group	33,237			28,366			4,871			92,160			90,995			1,165			36,765			29,094			7,671
Adjustments and Eliminations	(6,097		)	(1,346		)	(4,751		)	(11,526		)	(4,875		)	(6,651		)
Eliminations																			(6,249		)	(1,840		)	(4,409		)
	$	506,000		$	425,507		$	80,493		$	1,393,685		$	1,321,891		$	71,794		$	542,208		$	416,454		$	125,754
OPERATING INCOME:
Nuclear Operations Group	$	93,667		$	45,580		$	48,087		$	226,518		$	180,283		$	46,235		$	90,359		$	57,625		$	32,734
Nuclear Power Group	8,967			9,063			(96		)	36,433			38,637			(2,204		)	8,470			12,583			(4,113		)
Nuclear Services Group	5,516			6,494			(978		)	8,577			11,182			(2,605		)	6,400			1,571			4,829
Other	(6,948		)	(5,142		)	(1,806		)	(19,788		)	(13,542		)	(6,246		)	(5,359		)	(6,096		)	737
	$	101,202		$	55,995		$	45,207		$	251,740		$	216,560		$	35,180		$	99,870		$	65,683		$	34,187
Unallocated Corporate	(2,740		)	(5,600		)	2,860			(9,099		)	(14,728		)	5,629			(1,603		)	(2,039		)	436
Total Operating Income	$	98,462		$	50,395		$	48,067		$	242,641		$	201,832		$	40,809		$	98,267		$	63,644		$	34,623

Consolidated Results of Operations

~~Three months ended September 30, 2019 vs. 2018~~

Consolidated revenues increased ~~18.9%~~30.2%, or ~~$80.5~~$125.8 million, to ~~$506.0~~$542.2 million in the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$425.5~~$416.5 million for the corresponding period in ~~2018,~~2019, due to increases in revenues from our Nuclear Operations Group, Nuclear Power Group and Nuclear Services Group segments totaling ~~$75.2~~$119.0 million, ~~$5.2~~$3.5 million and ~~$4.9~~$7.7 million, respectively.

Consolidated operating income increased ~~$48.1~~$34.6 million to ~~$98.5~~$98.3 million in the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$50.4~~$63.6 million for the corresponding period of ~~2018.~~2019. Operating income in our Nuclear Operations Group, ~~segment~~Nuclear Services Group and Other segments increased by ~~$48.1~~$32.7 million, ~~which was partially due to unfavorable contract adjustments recorded in the prior year of $26.7 million.~~$4.8 million, and $0.7 million, respectively. In addition, we ~~also~~ experienced lower Unallocated Corporate expenses of ~~$2.9~~$0.4 million when compared to the corresponding period of 2018. These increases were partially offset by decreases in operating income in our Nuclear Power Group, Nuclear Services Group and Other segments of $0.1 million, $1.0 million and $1.8 million, respectively.

~~Nine months ended September 30, 2019 vs. 2018~~

Consolidated revenues increased 5.4%, or $71.8 million, to $1,393.7 million in the nine months ended September 30, 2019 compared to $1,321.9 million for the corresponding period in 2018, due to increases in revenues from our Nuclear

~~Operations Group and Nuclear Services Group segments totaling $89.5 million and $1.2 million, respectively.~~2019. These increases were partially offset by a decrease in ~~our Nuclear Power Group segment of $12.3 million.~~

Consolidated operating income increased $40.8 million to $242.6 million in the nine months ended September 30, 2019 compared to $201.8 million for the corresponding period of 2018. Operating income in our Nuclear Operations Group segment increased by $46.2 million, which was partially due to unfavorable contract adjustments recorded in the prior year of $29.2 million. In addition, we also experienced lower Unallocated Corporate expenses of $5.6 million when compared to the corresponding period of 2018. These increases were partially offset by decreases in operating income in our Nuclear Power Group ~~Nuclear Services Group and Other segments~~segment of ~~$2.2 million, $2.6 million and $6.2 million, respectively.~~$4.1 million.

Nuclear Operations Group

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 $ Change 2019 2018 $ Change
(In thousands)
Revenues $ 394,484
$ 319,325
$ 75,159
$ 1,057,637
$ 968,096
$ 89,541
Operating Income $ 93,667
$ 45,580
$ 48,087
$ 226,518
$ 180,283
$ 46,235
% of Revenues 23.7%
14.3%
21.4%
18.6%

~~Three months ended September 30, 2019 vs. 2018~~



	Three Months Ended March 31,
	2020		2019		$ Change
	(In thousands)
Revenues	$	423,775	$	304,801	$	118,974
Operating Income	$	90,359	$	57,625	$	32,734
% of Revenues	21.3%		18.9%

Revenues increased ~~23.5%~~39.0%, or ~~$75.2~~$119.0 million, to ~~$394.5~~$423.8 million in the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$319.3~~$304.8 million for the corresponding period of ~~2018.~~2019 as we continue to expand production related to the Columbia-Class nuclear propulsion system. The increase ~~was primarily attributable to increased activity~~comprised additional volume in the manufacture of nuclear components for U.S. Government programs ~~as well as~~and the timing of the procurement of certain long-lead materials when compared to the corresponding period of ~~2018. These increases were partially offset by lower activity in our downblending operations.~~2019.

Operating income increased ~~$48.1~~$32.7 million to ~~$93.7~~$90.4 million in the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$45.6~~$57.6 million for the corresponding period of ~~2018.~~2019. The increase was due to the operating income impact of the ~~net~~ changes in ~~revenues~~revenue noted above as well as ~~the~~favorable contract adjustments ~~recorded in the prior year which resulted from rework issues~~ related to ~~the manufacture of non-nuclear components of $26.7 million.~~our naval nuclear fuel operations.

~~Nine months ended September 30, 2019 vs. 2018~~

Nuclear Power Group



	Three Months Ended March 31,
	2020		2019		$ Change
	(In thousands)
Revenues	$	87,917	$	84,399	$	3,518
Operating Income	$	8,470	$	12,583	$	(4,113	)
% of Revenues	9.6%		14.9%

Revenues increased ~~9.2%~~4.2%, or ~~$89.5~~$3.5 million, to ~~$1,057.6~~$87.9 million in the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$968.1~~$84.4 million for the corresponding period of 2018. This increase was primarily attributable to increased activity in the manufacture of nuclear components for U.S. Government programs as well as the timing of the procurement of certain long-lead materials when compared to the corresponding period of 2018. These increases were partially offset by lower activity in our downblending operations.

Operating income increased $46.2 million to $226.5 million in the nine months ended September 30, 2019 compared to $180.3 million for the corresponding period of 2018. The increase was due to the operating income impact of the net changes in revenues noted above as well as the contract adjustments recorded in the prior year which resulted from rework issues related to the manufacture of non-nuclear components of $29.2 million.

~~Nuclear Power Group~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 $ Change 2019 2018 $ Change
(In thousands)
Revenues $ 84,376
$ 79,162
$ 5,214
$ 255,414
$ 267,675
$ (12,261 )
Operating Income $ 8,967
$ 9,063
$ (96 ) $ 36,433
$ 38,637
$ (2,204 )
% of Revenues 10.6%
11.4%
14.3%
14.4%

~~Three months ended September 30, 2019 vs. 2018~~

~~Revenues increased 6.6%, or $5.2 million, to $84.4 million in the three months ended September 30, 2019 compared to $79.2 million for the corresponding period of 2018.~~2019. The increase was primarily related to ~~a $10.6 million increase in~~higher revenues in our nuclear components business of $9.5 million largely attributable to increased activity associated with a major steam generator design and supply ~~contract. This segment also experienced an increase in revenues of $3.6 million associated with our MI business, which was acquired in~~contract as well as the ~~third quarter of 2018.~~Laker Energy Products acquisition. These increases were partially offset by ~~a decrease in revenues related to~~ lower levels of in-plant inspection, ~~refurbishment,~~ maintenance and modification services ~~and nuclear fuel handling work~~ when compared to the same period in the prior year.

Operating income decreased ~~$0.1~~$4.1 million to ~~$9.0~~$8.5 million in the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$9.1~~$12.6 million for the corresponding period of ~~2018,~~2019, primarily attributable to a decline in operating margins as a result of a shift in our product line mix when compared to the same period in the prior year.

~~Nine months ended September 30, 2019 vs. 2018~~

Revenues decreased 4.6%, or $12.3 million, to $255.4 million in the nine months ended September 30, 2019 compared to $267.7 million for the corresponding period of 2018. The decrease was primarily attributable to a decline in revenues resulting from a lower volume of in-plant inspection, refurbishment and maintenance and modification services when compared to the same period in the prior year. This decrease was partially offset by a $24.2 million increase in revenues associated with our MI business and increased activity in our nuclear components business.

Operating income decreased $2.2 million to $36.4 million in the nine months ended September 30, 2019 compared to $38.6 million for the corresponding period of 2018, primarily attributable to the decrease in revenues noted above.

Nuclear Services Group

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 $ Change 2019 2018 $ Change
(In thousands)
Revenues $ 33,237
$ 28,366
$ 4,871
$ 92,160
$ 90,995
$ 1,165
Operating Income $ 5,516
$ 6,494
$ (978 ) $ 8,577
$ 11,182
$ (2,605 )
% of Revenues 16.6%
22.9%
9.3%
12.3%

~~Three months ended September 30, 2019 vs. 2018~~



	Three Months Ended March 31,
	2020		2019		$ Change
	(In thousands)
Revenues	$	36,765	$	29,094	$	7,671
Operating Income	$	6,400	$	1,571	$	4,829
% of Revenues	17.4%		5.4%

Revenues increased ~~17.2%~~26.4%, or ~~$4.9~~$7.7 million, to ~~$33.2~~$36.8 million in the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$28.4~~$29.1 million for the corresponding period of ~~2018.~~2019. The increase was primarily attributable to an increase in the volume of commercial nuclear inspection and maintenance outage work in the U.S. when compared to the same period in the prior year.

Operating income ~~decreased $1.0~~increased $4.8 million to ~~$5.5~~$6.4 million in the three months ended ~~September 30, 2019~~March 31, 2020 compared to ~~$6.5~~$1.6 million for the corresponding period of 2018. The decrease was primarily attributable to lower levels of income at a site in New Mexico that we exited in the prior year. This decrease was partially offset by improved operating performance largely attributable2019 due to the ~~increase~~operating income impact of the changes in ~~revenues in our U.S. commercial nuclear services business noted above.~~

~~Nine months ended September 30, 2019 vs. 2018~~

Revenues increased 1.3%, or $1.2 million, to $92.2 million in the nine months ended September 30, 2019 compared to $91.0 million for the corresponding period of 2018. The increase was primarily attributable to an increase in the volume of commercial nuclear inspection and maintenance outage work in the U.S. when compared to the same period in the prior year. This increase was partially offset by lower levels of cost reimbursable activities at a joint venture site in New Mexico that was transitioned to us during the prior year.

Operating income decreased $2.6 million to $8.6 million in the nine months ended September 30, 2019 compared to $11.2 million for the corresponding period of 2018. The decrease was primarily attributable to higher selling, general and administrative expenses related to business development activities caused by the timing of proposal activities and lower levels of income at a site in New Mexico that we exited in the prior year. These decreases were partially offset by improved operating

~~performance at several of our sites as well as the increase in revenues related to our U.S. commercial nuclear services business~~revenue noted above.

Other

Three Months Ended
September 30, Nine Months Ended
September 30,
2019 2018 $ Change 2019 2018 $ Change
(In thousands)
Operating Income $ (6,948 ) $ (5,142 ) $ (1,806 ) $ (19,788 ) $ (13,542 ) $ (6,246 )



	Three Months Ended March 31,
	2020			2019			$ Change
	(In thousands)
Operating Income	$	(5,359	)	$	(6,096	)	$	737

Operating income ~~decreased $1.8 million and $6.2~~increased $0.7 million in the three ~~and nine~~ months ended ~~September 30, 2019, respectively,~~March 31, 2020, primarily due to ~~an increase~~a decrease in research and development related activities related to our medical and industrial radioisotope capabilities and other ~~nuclear~~advanced technologies when compared to the corresponding ~~periods~~period of the prior year.

Unallocated Corporate

Unallocated corporate expenses decreased ~~$2.9 million and $5.6~~$0.4 million in the three ~~and nine~~ months ended ~~September 30, 2019, respectively,~~March 31, 2020, primarily due to ~~higher levels of~~a decrease in costs associated with benefits programs when compared to the same period in the prior year which was partially offset by an increase in legal and consulting costs associated with due diligence activities conducted in the ~~prior year as well as lower healthcare claims in the~~ current year.

~~Other Income Statement Items~~

Other income (expense) decreased $38.1 million to a loss of $4.0 million in the three months ended September 30, 2019, as compared to a gain of $34.2 million for the corresponding period of 2018, due primarily to a $35.1 million mark to market adjustment recorded in the prior year related to the interim remeasurement of two of our domestic pension plans as discussed in Note 4 to our condensed consolidated financial statements included in this Report.

Other income (expense) decreased $54.5 million to a loss of $7.5 million in the nine months ended September 30, 2019, as compared to a gain of $47.0 million for the corresponding period of 2018, due primarily to the mark to market adjustment noted above as well as an increase in net periodic benefit cost. In addition, we experienced an increase in interest expense of $7.7 million in the nine months ended September 30, 2019 associated with higher levels of long-term debt when compared to the prior year.

Provision for Income Taxes


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
	2019		2018		$ Change		2019		2018		$ Change			2020		2019		$ Change
	(In thousands)													(In thousands)
Income before Provision for Income Taxes	$	94,506	$	84,559	$	9,947	$	235,117	$	248,802	$	(13,685	)	$	98,448	$	62,877	$	35,571
Provision for Income Taxes	$	19,508	$	6,482	$	13,026	$	52,009	$	43,578	$	8,431		$	22,828	$	13,767	$	9,061
Effective Tax Rate	20.6%		7.7%				22.1%		17.5%					23.2%		21.9%

We primarily operate in the U.S. and Canada, and we recognize our U.S. income tax provision based on the U.S. federal statutory rate of 21% and our Canadian tax provision based on the Canadian local statutory rate of approximately 25%.

Our effective tax rate for the three months ended ~~September 30, 2019~~March 31, 2020 was ~~20.6%~~23.2% as compared to ~~7.7%~~21.9% for the three months ended ~~September 30, 2018. Our effective tax rate for the nine months ended September 30, 2019 was 22.1% as compared to 17.5% for the nine months ended September 30, 2018.~~March 31, 2019. The effective tax ~~rate~~rates for the three months ended ~~September 30,~~March 31, 2020 and 2019 was lower than the U.S. corporate income tax rate of 21% primarily due to state tax planning initiatives finalized in the quarter. The effective tax rate for the nine months ended September 30, 2019 waswere higher than the U.S. corporate income tax rate of 21% primarily due to state income taxes within the ~~U.S~~U.S. and the unfavorable rate differential associated with our Canadian earnings. Our effective tax rates for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ were favorably impacted by benefits recognized for excess tax benefits related to employee share-based payments of ~~$2.0~~$0.7 million and ~~$2.7~~$1.7 million, respectively. ~~In addition, our effective tax rates for the three and nine months ended September 30, 2018 were~~

favorably impacted due to remeasurement adjustments to our deferred tax assets as a result of accelerating additional contributions made in August 2018 to certain of our domestic pension plans for inclusion in our 2017 U.S. tax return.

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 fiscal quarter.

Our backlog is equal to our remaining performance obligations under contracts that meet the criteria in FASB Topic Revenue from Contracts with Customers, as discussed in Note 3 to our condensed 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 Nuclear Operations Group and Nuclear Services Group segments. Backlog may not be indicative of future operating results, and projects in our backlog may be cancelled, modified or otherwise altered by customers.


	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
	(In approximate millions)				(In approximate millions)
Nuclear Operations Group	$	3,445	$	2,637	$	4,282	$	4,515
Nuclear Power Group	729		804		778		730
Nuclear Services Group	46		38		51		43
Total Backlog	$	4,220	$	3,479	$	5,111	$	5,288

We do not include the value of our unconsolidated joint venture contracts in backlog. These unconsolidated joint ventures are included in our Nuclear Services Group segment.

Of the ~~September 30, 2019~~March 31, 2020 backlog, we expect to recognize revenues as follows:


	2019		2020		Thereafter		Total		2020		2021		Thereafter		Total
	(In approximate millions)								(In approximate millions)
Nuclear Operations Group	$	357	$	1,065	$	2,023	$	3,445	$	1,116	$	1,043	$	2,123	$	4,282
Nuclear Power Group	96		200		433		729		183		183		412		778
Nuclear Services Group	21		12		13		46		34		6		11		51
Total Backlog	$	474	$	1,277	$	2,469	$	4,220	$	1,333	$	1,232	$	2,546	$	5,111

At ~~September 30, 2019,~~March 31, 2020, Nuclear Operations Group backlog with the U.S. Government was ~~$2,960.4~~$3,835.2 million, ~~$113.9~~$429.2 million of which had not yet been funded.

At ~~September 30, 2019,~~March 31, 2020, Nuclear Power Group had no backlog with the U.S. Government.

At ~~September 30, 2019,~~March 31, 2020, Nuclear Services Group backlog with the U.S. Government was ~~$17.7~~$27.5 million, ~~$0.1 million~~all of which ~~had not yet been~~was funded.

Major new awards from the U.S. Government are typically received following Congressional approval of the budget 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. In ~~March~~ 2019, we received ~~a nuclear component and fuel award~~awards from the U.S. Government with a combined value ~~exceeding $2.1~~in excess of $3.9 billion, inclusive of unexercised options, approximately ~~$1.5~~$2.9 billion of which had been added to backlog as of ~~September 30, 2019.~~March 31, 2020. The value of unexercised options excluded from backlog as of ~~September 30, 2019~~March 31, 2020 was approximately ~~$0.6~~$1.0 billion, ~~the majority of~~ which is expected to be exercised ~~in 2020, subject to annual Congressional appropriations.~~

In September 2019, we received a contract for the procurement of long-lead materials required for the manufacture of naval nuclear reactor components valued at $806.0 million, inclusive of unexercised options. Approximately $75.0 million of

~~this award was added to backlog during the third quarter of 2019 with six remaining annual options available~~ through 2025, subject to annual Congressional appropriations.

Liquidity and Capital Resources

Credit Facility

On March 24, 2020, we entered into an Amendment No. 1 to Credit Agreement (the "Amendment"), which amended the Credit Agreement dated May 24, 2018 ~~we and certain of our subsidiaries entered into a credit agreement~~ (the "Credit Facility") with Wells Fargo Bank, N.A., as administrative agent, and the other lenders party thereto. The Credit Facility ~~includes~~originally provided for a ~~$500.0~~$500 million senior secured revolving credit facility (the "Revolving Credit Facility"), a ~~$50.0~~$50 million U.S. dollar senior secured term loan A made available to the Company (the "USD Term Loan") and a ~~$250.0~~$250 million (U.S. dollar equivalent) Canadian dollar senior secured term loan A made available to BWXT Canada Ltd. (the "CAD Term Loan" and together with the USD Term Loan, the "Term Loans"). ~~All~~

The Term Loans are scheduled to mature on May 24, 2023, and all obligations under the Revolving Credit Facility are scheduled to mature on ~~May~~March 24, ~~2023.~~2025. The proceeds of loans under the Revolving Credit Facility are available for working capital needs, permitted acquisitions and other general corporate purposes.

The Credit Facility allows for additional parties to become lenders and, subject to certain conditions, for the increase of the commitments under the Credit Facility, subject to an aggregate maximum for all additional commitments of (1) the greater of (a) $250 million and (b) 65% of EBITDA, as defined in the Credit Facility, for the last four full fiscal quarters, plus (2) all voluntary prepayments of ~~term loans,~~the Term Loans, plus (3) additional amounts provided the Company is in compliance with a pro forma first lien leverage ratio test of less than or equal to 2.50 to 1.00.

the ~~Credit Facility~~CAD Term Loan are guaranteed, subject to certain exceptions, by substantially all of the Company's present and future wholly owned Canadian and domestic restricted subsidiaries.

The Credit Facility requires interest payments on revolving loans on a periodic basis until maturity. We began making quarterly amortization payments on the ~~USD~~ Term ~~Loan and the CAD Term Loan~~Loans in amounts equal to 1.25% of the initial aggregate principal amount of each ~~term~~ loan in the third quarter of 2018. We may prepay all loans under the Credit Facility at any time without premium or penalty (other than customary Eurocurrency breakage costs), subject to notice requirements.

The Credit Facility includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted leverage ratio is 4.00 to 1.00, which may be increased to 4.50 to 1.00 for up to four consecutive fiscal quarters after a material acquisition. The minimum consolidated interest coverage ratio is 3.00 to 1.00. In addition, the Credit Facility contains various restrictive covenants, including with respect to debt, liens, investments, mergers, acquisitions, dividends, equity repurchases and asset sales. As of ~~September 30, 2019,~~March 31, 2020, we were in compliance with all covenants set forth in the Credit Facility.

~~Outstanding loans under the Credit Facility will~~The Term Loans bear interest at our option at either (1) the Eurocurrency rate plus a margin ranging from 1.25% to 2.0% per year or (2) the base rate or Canadian index rate, as applicable (described in the Credit Facility as the highest of (a) with respect to the base rate only, the federal funds rate plus 0.5%, (b) the one-month Eurocurrency rate plus 1.0% and (c) the administrative agent's prime rate or the Canadian prime rate, as applicable), plus, in each case, a margin ranging from 0.25% to 1.0% per year. Outstanding loans under the Revolving Credit Facility bear interest at our option at either (1) the Eurocurrency rate plus a margin ranging from 1.0% to 1.75% per year or (2) the base rate plus a margin ranging from 0.0% to 0.75% per year. We are charged a commitment fee on the unused portion of the Revolving Credit Facility, and that fee ranges from 0.15% to ~~0.275%~~0.225% per year. Additionally, we are charged a letter of credit fee of between ~~1.25%~~1.0% and ~~2.0%~~1.75% per year with respect to the amount of each financial letter of credit issued under the Credit Facility, and a letter of credit fee of between 0.75% and ~~1.2%~~1.05% per year with respect to the amount of each performance letter of credit issued under the Credit Facility. The applicable margin for loans, the commitment fee and the letter of credit fees set forth above will vary quarterly based on our leverage ratio. Based on the leverage ratio applicable at ~~September 30, 2019,~~March 31, 2020, the margin for Eurocurrency rate and base rate or Canadian index rate term loans was ~~1.5%~~1.375% and ~~0.5%~~0.375%, respectively, the margin for Eurocurrency rate and base rate revolving loans was 1.25% and 0.25%, respectively, the letter of credit fee for financial letters of credit and performance letters of credit was ~~1.5%~~1.25% and ~~0.9%~~0.825%, respectively, and the commitment fee for the unused portion of the Revolving Credit Facility was ~~0.225%~~0.175%.

As of ~~September 30, 2019,~~March 31, 2020, borrowings outstanding totaled ~~$272.5~~$254.1 million and ~~$200.0~~$280.0 million under ~~our term loans~~the Term Loans and ~~revolving line of credit,~~Revolving Credit Facility, respectively, and letters of credit issued under the Revolving Credit Facility totaled ~~$64.0~~$65.7 million. As a result, we had ~~$236.0~~$404.3 million available under the Revolving Credit Facility for borrowings or to meet letter of credit requirements as of ~~September 30, 2019.~~March 31, 2020. As of ~~September 30, 2019,~~March 31, 2020, the weighted-average interest rate on outstanding borrowings under our Credit Facility was ~~3.50%~~2.40%.

The Credit Facility generally includes customary events of default for a secured credit ~~facility, some of which allow for an opportunity to cure.~~facility. Under the Credit Facility, (1) if an event of default relating to bankruptcy or other insolvency events occurs 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.

Senior Notes

We issued $400.0 million aggregate principal amount of 5.375% senior notes due 2026 (the "Senior Notes") pursuant to an indenture dated May 24, 2018 (the "Indenture"), among the Company, certain of our subsidiaries, as guarantors, and U.S. Bank National Association, as trustee. The Senior Notes 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 is payable semi-annually in cash in arrears on January 15 and July 15 of each year, which commenced on July 15, 2018, at a rate of 5.375% per annum. The Senior Notes will mature on July 15, 2026.

On and after July 15, 2021, the Company may redeem the Senior Notes, in whole or in part, at a redemption price equal to (i) 102.688% of the principal amount to be redeemed if the redemption occurs during the twelve-month period beginning on July 15, 2021, (ii) 101.344% of the principal amount to be redeemed if the redemption occurs during the twelve-month period beginning on July 15, 2022 and (iii) ~~100.000%~~100% of the principal amount to be redeemed if the redemption occurs on or after July 15, 2023, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date. At any time prior to July 15, 2021, the Company may also redeem up to 40% of the Senior Notes with net cash proceeds of certain equity offerings at a redemption price equal to 105.375% of the principal amount of the Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to July 15, 2021, the Company may redeem the Senior Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Senior Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus an applicable "make-whole" premium.

The Indenture contains customary events of default, including, among other things, payment default, failure to comply with covenants or agreements contained in the Indenture or the Senior Notes and certain provisions related to bankruptcy events. The Indenture also contains customary negative covenants. As of ~~September 30, 2019,~~March 31, 2020, we were in compliance with all covenants ~~and agreements~~ set forth in the Indenture and the Senior Notes.

Other Arrangements

We have posted surety bonds to support regulatory and contractual obligations for certain decommissioning responsibilities, projects and legal matters. We utilize bonding facilities to support such obligations, but the issuance of bonds under those facilities is typically at the surety's ~~discretion.~~discretion, and the bonding 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 bonding capacity, we believe our current capacity is adequate to support our existing requirements for the next twelve months. In addition, these 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 ~~September 30, 2019,~~March 31, 2020, bonds issued and outstanding under these arrangements totaled approximately ~~$73.2~~$72.9 million.

Long-term Benefit Obligations

~~Our unfunded~~As of March 31, 2020, we had underfunded defined benefit pension and postretirement benefit plans with obligations ~~totaled $185.4 million at September 30, 2019.~~totaling approximately $190.1 million. These long-term liabilities are expected to require use of our resources to satisfy future funding obligations. Based largely on statutory funding requirements, we expect to make contributions of approximately ~~$3.1~~$6.7 million for the remainder of ~~2019~~2020 related to our

pension and postretirement plans. We may also make additional contributions based on a variety of factors including, but not limited to, tax planning, evaluation of funded status and risk mitigation strategies.

Other

Our domestic and foreign cash and cash equivalents, restricted cash and cash equivalents and investments as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows:


	September 30, 2019		December 31, 2018		March 31, 2020		December 31, 2019
	(In thousands)				(In thousands)
Domestic	$	28,887	$	37,108	$	70,826	$	76,337
Foreign	4,073		10,279		22,701		29,526
Total	$	32,960	$	47,387	$	93,527	$	105,863

Our working capital increased by ~~$122.6~~$118.8 million to ~~$287.7~~$343.9 million at ~~September 30, 2019~~March 31, 2020 from ~~$165.1~~$225.0 million at December 31, ~~2018,~~2019, primarily attributable to changes in ~~net~~ contracts in progress, ~~and~~ advance billings and retainages due to the timing of project cash ~~flows.~~flows and a decrease in current liabilities associated with the timing of vendor payments and the payment of accrued incentives during the three months ended March 31, 2020.

Our net ~~cash provided by operating activities increased by $99.4 million to $91.0 million in the nine months ended September 30, 2019, compared to~~ cash used in operating activities ~~of $8.4~~decreased by $11.3 million to $6.4 million in the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2020, compared to $17.7 million in the three months ended March 31, 2019. The ~~increase~~decrease in cash ~~provided by~~used in operating activities was primarily attributable to ~~a $153.4 million decrease~~an increase in ~~pension contributions when compared to the same period in the prior year,~~net income partially offset by an increase in working capital needs for the ~~timing of project cash flows.~~period ended March 31, 2020.

Our net cash used in investing activities ~~decreased~~increased by ~~$154.6~~$34.3 million to ~~$122.4~~$78.8 million in the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, compared to ~~$277.0~~$44.5 million in the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. The ~~decrease~~increase in cash used in investing activities was primarily attributable to ~~our acquisition of the MI business for $213.0 million during the third quarter of 2018, which was partially offset by~~ an increase in purchases of property, plant and equipment of ~~$62.1~~$20.2 million as well as our acquisition of Laker Energy Products for $16.2 million in the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

Our net cash provided by financing activities ~~decreased~~increased by ~~$138.9~~$22.3 million to ~~$15.0~~$77.8 million in the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, compared to ~~$153.9~~$55.4 million in the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. The ~~decrease~~increase in cash provided by financing activities was primarily attributable to ~~a decrease~~an increase in net borrowings of ~~$187.2 million, which was partially offset by a decrease in repurchases of common shares of $42.6~~$17.4 million.

At ~~September 30, 2019,~~March 31, 2020, we had restricted cash and cash equivalents totaling ~~$6.4~~$5.9 million, $2.8 million of which was held for future decommissioning of facilities (which is included in other assets on our condensed consolidated balance sheets) and ~~$3.5~~$3.1 million of which was held to meet reinsurance reserve requirements of our captive insurer.

At ~~September 30, 2019,~~March 31, 2020, we had short-term and long-term investments with a fair value of ~~$13.0~~$10.0 million. Our investment portfolio consists primarily of U.S. Government and agency securities, corporate bonds and ~~equities,~~ mutual ~~funds and asset-backed securities.~~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 unrealized gains and losses, net of tax, being reported as a component of other comprehensive income. Our equity securities are carried at fair value with the unrealized gains and losses reported in earnings.

Based on our liquidity position, we believe we have sufficient cash and letter of credit and borrowing capacity to fund our operating requirements for at least the next 12 months.


Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposures to market risks have not changed materially from those disclosed in Item 7A included in Part II of our ~~2018~~2019 10-K.


Item 4.	CONTROLS AND PROCEDURES

As of the end of the period covered by this quarterly report, we carried out an evaluation 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~~Securities and Exchange Commission ("SEC") under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the "Exchange Act"))~~Act). This evaluation was

conducted under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. 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. You should note 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 you 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 the design and operation of our disclosure controls and procedures are effective as of ~~September 30, 2019~~March 31, 2020 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 ~~Securities and Exchange Commission,~~SEC, and such information is accumulated and communicated to management as appropriate to allow timely decisions regarding disclosure. There has been no change in our internal control over financial reporting during the ~~quarter~~three months ended ~~September 30, 2019~~March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION


Item 1.	LEGAL PROCEEDINGS

For information regarding ongoing investigations and litigation, see Note 56 to our unaudited condensed consolidated financial statements in Part I of this ~~report,~~Report, which we incorporate by reference into this Item.


Item 1A.	RISK FACTORS

In addition to the other information in this ~~report,~~Report, the other factors presented in Item 1A ~~Risk Factors~~"Risk Factors" in our ~~2018~~2019 10-K are some of the factors that could materially affect our business, financial condition or future results. There have been no material changes to our risk factors from those disclosed in our ~~2018 10-K.~~2019 10-K, except as noted below:

Actual or threatened public health epidemics or outbreaks, such as the recent outbreak of the COVID-19 illness, could have a material adverse effect on our business and results of operations.

Actual or threatened public health epidemics or outbreaks, such as the recent global outbreak of the novel coronavirus disease ("COVID-19"), could have a material adverse effect on our business and results of operations. COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread to over 200 countries, including every state in the United States. COVID-19 is impacting worldwide economic activity and has resulted in travel disruption, trade disruption and has affected companies’ operations around the world, including us. A public health epidemic, including COVID-19, poses the risk that we or our employees, contractors, suppliers and other partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities. On March 13, 2020, the United States declared a national emergency with respect to COVID-19 and more than 40 states have since issued orders requiring the closing of nonessential businesses and/or requiring residents to stay at home. If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions in connection with the COVID-19 pandemic, our operations will likely be impacted. Although our U.S. and Canadian facilities have to date been deemed "essential" by federal, state and local authorities and currently continue to operate, there can be no assurance that such authorities will not impose restrictions on the operations of our facilities as a result of the COVID-19 pandemic or that our facilities will continue to operate during the pandemic. If our operations or the operations of our suppliers are restricted, we may be unable to perform fully on our contracts and our costs may increase as a result of the COVID-19 outbreak. These cost increases may result in unfavorable changes in estimate which may not be fully recoverable or adequately covered by insurance.

While it is not possible at this time to estimate the impact that COVID-19 could have on our business, the continued spread of COVID-19 and the measures taken by the governments of countries affected, as well as measures taken by state and local authorities in the United States, could disrupt the supply chain and the manufacture or shipment of our products and adversely impact our business, financial condition or results of operations. We have already experienced delays in the bidding and contracting process for our U.S. Government businesses, as well as the rescheduling of certain services that our U.S. and Canadian nuclear service businesses provide during nuclear power plant outages. More widespread or further delays could have a material adverse impact on our results of operations.

The COVID-19 outbreak and mitigation measures may also have an adverse impact on global economic conditions, which could have an adverse effect on our business. The extent to which the COVID-19 outbreak impacts our business will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact.


Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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~~three months ended ~~September 30, 2019.~~March 31, 2020. 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.

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⁾
July 1, 2019 - July 31, 2019 24
$ 49.83
—
$ 165.3
August 1, 2019 - August 31, 2019 505
$ 56.82
—
$ 165.3
September 1, 2019 - September 30, 2019 8,547
$ 59.71
—
$ 165.3
Total 9,076
$ 59.52
—



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⁾
January 1, 2020 - January 31, 2020	186,639	$	65.41	186,639	$	153.1
February 1, 2020 - February 29, 2020	129,796	$	66.16	116,001	$	145.3
March 1, 2020 - March 31, 2020	77,173	$	55.47	—	$	145.3
Total	393,608	$	63.71	302,640


(1)	Includes ~~24, 505~~0, 13,795 and ~~8,547~~77,173 shares repurchased during ~~July, August~~January, February and ~~September,~~March, respectively, pursuant to the provisions of employee benefit plans that permit the repurchase of shares to satisfy statutory tax withholding obligations.


(2)	On November 6, 2018, we announced that 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 $250 million during a three-year period that expires on November 6, 2021.


~~Item 5.~~	~~OTHER INFORMATION~~

On November 1, 2019, the Company amended its Amended and Restated Bylaws to provide clarification of the designation of corporate officers and other positions, approval of director compensation and conforming changes. The foregoing description is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws, which are attached hereto as Exhibit 3.3 and incorporated herein by reference.


Item 6.	EXHIBITS



Exhibit Number		Description
3.1		Certificate of Amendment to Restated Certificate of Incorporation dated May 14, 2019 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed with the SEC on May 17, 2019 (File No. 1-34658)).

3.2		Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the SEC on May 17, 2019 (File No. 1-34658)).

3.3		Amended and Restated ~~Bylaws.~~Bylaws (incorporated by reference to Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (File No. 1-34658)).

10.1		Amendment No. 1 to Credit Agreement, dated as of March 24, 2020, among BWX Technologies, Inc. as administrative borrower, BWXT Canada Ltd., as the Canadian borrower, Wells Fargo Bank, N.A., as administrative borrower and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the SEC on March 25, 2020 (File No. 1-34658)).

10.2*		Form of 2020 Performance Restricted Stock Unit Grant Agreement for Employees.

10.3*		Form of 2020 Restricted Stock Unit Grant Agreement for Employees.

31.1		Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer.

32.1		Section 1350 certification of Chief Executive Officer.

32.2		Section 1350 certification of Chief Financial Officer.

101.INS		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		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements 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/ David S. Black
	By:	David S. Black
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer and Duly Authorized
		Representative)

		/s/ Jason S. Kerr
	By:	Jason S. Kerr
		Vice President and Chief Accounting Officer
		(Principal Accounting Officer and Duly Authorized
		Representative)

~~November~~May 4, ~~2019~~2020

3531



2019	$	1,785
2020	3,239
2021	2,176
2022	1,341
2023	606
2024	170
Thereafter	1,107
Total lease payments	$	10,424
Less: interest	(1,044		)
Present value of lease liabilities ⁽¹⁾	$	9,380



Accounts receivable – trade	$	7,732
Contracts in progress	51
Inventories	2,113
Other current assets	97
Property, plant and equipment	12,948
Goodwill	62,495
Deferred Income Taxes	3,006
Intangible assets	139,257
Total assets acquired	$	227,699
Accounts payable	$	654
Accrued employee benefits	579
Accrued liabilities – other	1,665
Environmental liabilities	2,062
Pension liability	9,746
Total liabilities assumed	$	14,706
Net assets acquired	$	212,993
Amount of tax deductible goodwill	$	53,693



	Amount		Amortization Period
Technical support agreement	$	67,500	23 years
Unpatented technology	$	33,000	23 years
Favorable operating leases	$	28,157	13-30 years
Customer relationship	$	10,600	23 years



	Three Months Ended		Nine Months Ended
	September 30, 2018		September 30, 2018
	(In thousands, except per share amounts)
Revenues	$	429,558	$	1,347,031
Net Income Attributable to BWX Technologies, Inc.	$	79,141	$	206,435
Basic Earnings per Common Share	$	0.80	$	2.07
Diluted Earnings per Common Share	$	0.79	$	2.05