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JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company

Babcock & Wilcox Company · Jun 17, 2015 · 62 slides

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Slides

  1. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 1
    Investor and Analyst Day June 17, 2015
  2. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 2
    Welcome M. Alan Nethery Vice President Investor Relations and Corporate Procurement
  3. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 3
    Agenda Welcome 9:30 9:40 M. Alan Nethery (VP, Investor Relations and Corporate Procurement) Opening Remarks, Strategy and Introductions 9:40 10:00 John A. Fees (Executive Chairman) Company Overview 10:00 10:10 P. Sandy…
  4. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 4
    Opening Remarks, Strategy and Management Introductions John A. Fees Executive Chairman
  5. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 5
    Power Generation Spin-off Overview Transaction Overview The Babcock & Wilcox Company (B&W) is spinning-off the companys Power Generation business Tax-free spin-off to B&W shareholders Post-transaction, shareholders will own 100% of…
  6. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 6
    BWXT Key Investment Highlights Critical platform for defense and energy applications Premier US Government and Leading supplier of nuclear design, equipment, components, fuel and specialty technical services to the energy market…
  7. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 7
    BWXT Strategic Priorities Run the Business Maintain Financial Strength Create Shareholder Value Continue as sole manufacturer of Focus on financial efficiency and Continue to deliver on base naval nuclear reactors for capacity to…
  8. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 8
    BWXT Experience with Creating Shareholder Value NOG Segment Growth Story 2007: Acquired MMC for 72M (Marine Mechanical Corporation) Revenue (M) 2008: Acquired NFS for 165M (Nuclear Fuel Services) Margin (%) 6,000 24 1993-4: Acquired…
  9. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 9
    BWXT Positioning 2014 EBITDA Margin (%) 25% 22.5% 21.4% 20.9% 20% 17.9% 17.5% 15.6% 15.3% Median: 15.4% 15% 14.2% 13.5% 13.5% 13.4% 10% 5% 0% Rockwell Harris BWX Curtiss- Esterline Orbital Northrop General…
  10. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 10
    BWXT Business Segments Nuclear Operations Technical Services Group Nuclear Energy Group (BWXT NOG) (BWXT TSG) (BWXT NE) (BWXT DesignNOG) and manufacture Manage and operate Design and fabricate critical components and…
  11. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 11
    BWXT Leadership / Management Presenters John A. Fees P. Sandy Baker Joseph G. (Joe) Henry William A. (Bill) Fox III David S. Black Executive Chairman Chief Executive Officer President & President, Senior Vice President and…
  12. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 12
    Company Overview P. Sandy Baker Chief Executive Officer
  13. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 13
    Company Metrics Company Overview Locations BWXT owns and operates six major manufacturing facilities 5,100 employees worldwide 1,400 Joint Venture employees 4,000 employees hold security clearances from NRC, DOE and DOD…
  14. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 14
    Our End-Markets Leading technology innovator and specialty manufacturer of nuclear components Defense Manufacturing Government Services Commercial Nuclear Energy Virginia-Class submarine Nuclear material handling, Field services…
  15. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 15
    BWXT Now & Beyond Global landscape favors BWXT products/services State of Business Nuclear Operations Group Technical Services Group Nuclear Energy Continued delivery of Virginia- Active bids Chalk River (CNL), Right-sizing for…
  16. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 16
    Operational Initiatives Operational Strategy Financial Benefits A continuous improvement culture Increases shareholder returns supported by a systematic, data-driven approach to achieving business benefits Operating income…
  17. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 17
    Growth Strategy BWXT will focus on the continuous execution and improvement of its predictable, long-term business, achieving EPS growth through: Organic growth leveraging our customer relationships within existing markets Critical…
  18. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 18
    Nuclear Operations Joe Henry President & Chief Operating Officer, Nuclear Operations Group
  19. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 19
    Nuclear Operations Group (NOG) Overview Key End-Products Highly complex, regulated and high- consequence manufacturing Sole manufacturer of naval nuclear reactors for submarines and aircraft carriers Provides nuclear…
  20. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 20
    Nuclear Operations Group (NOG) NFS NOG-E NOG-L NOG-B NOG-MTV Facility Location Erwin, TN Euclid, OH Lynchburg, VA Barberton, OH Mount Vernon, IN Employees 700 280 2,100 650 175 (Approx) Manufacturing Capacity 271,000…
  21. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 21
    Nuclear Operations Group (NOG) Products Overview 2015 BWX Technologies, Inc. All rights reserved. 22
  22. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 22
    Nuclear Operations Group (NOG) Nuclear Fuel Services NOG-E Erwin, TN Euclid, OH Control Rod Drive Fuel Mechanisms NOG-M NOG-L NOG-B Reactor Mt. Vernon, IN Lynchburg, VA Vessels & Barberton, OH Components Vessels, Steam…
  23. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 23
    US Navy Long-term Procurement Year 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Aircraft Carrier Construction CVN-78 Gerald R. Ford CVN-79 John F. Kennedy CVN-80 Enterprise Aircraft Carrier Program…
  24. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 24
    NFS HEU Downblending Capabilities HEU NUCLEAR FUEL SERVICES, INC. LEU HEU U-Metals Commercial U-Compounds Fuel HEU U-Oxides Government U-Compounds Stockpile Reactor Fuel 3 5 metric tons of HEU per year 2015 BWX…
  25. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 25
    Nuclear Operations Group (NOG) Technologies Primary Services Nuclear Materials Engineering Provides nuclear material related analytical services to nuclear utility and government customers. Includes a hot cell facility capable of…
  26. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 26
    Future Growth on a Strong, Stable Foundation Organic Growth Potential opportunity of up to 332 tubes split between Virginia-Class and Ohio Replacement Class (1.5B program) Ohio Replacement Class Reactor Plant Research test…
  27. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 27
    NOG Financials Business Status Update NOG Operating Profit M Margin Strong operating income history 320 40% 270 Past 3 years 20% operating margin 226 238 240 30% 194 169 CAGR of 16.7% since 2008 160 126 20% 107 Healthy…
  28. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 28
    2015 Priorities and Outlook Maintain excellent safety record Run the Business Continue focus on quality and schedule Exceed planned volume at all sites Maximize production at all sites Increase backlog Maintain Financial…
  29. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 29
    Technical Services Bill Fox President, Technical Services Group and Nuclear Energy
  30. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 30
    TSG Overview Targeted Customers Key Services DOE National Nuclear Security Manage and operate government-owned nuclear weapons Administration (NNSA) enterprise and related facilities DOE Environmental Management (EM) National…
  31. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 31
    TSGs Unique Operational Attributes Long-term Recurring Average contract period of performance is five-year base plus option years Operating Income Stream Operating model leverages U.S. government letter of credit (for M&O…
  32. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 32
    Mandated TSG Projects/Assignments M&O nuclear weapons enterprise Laboratory Management National Nuclear Key sites (partners) with approx. Govt Fiscal Year 2015 budget: Security Agency Los Alamos National Laboratory (Bechtel, Univ.…
  33. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 33
    TSG Footprint BWXT Technical Services Group Portsmouth D&D DUF6 Conversion Project Idaho National Lab Advanced Mixed Waste Treatment Project Naval Reactor Facility D&D Chalk River NR D&D-KAPL/KSO West Valley Lawrence…
  34. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 34
    Near-term Opportunities Proposal submitted for 5-year extension at Portsmouth Chalk River proposal submittal Kansas City Plant proposal submitted Savannah River Remediation (SRR) expected 2-year extension BW Conversion Services…
  35. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 35
    Nuclear Energy Bill Fox President, Technical Services Group and Nuclear Energy
  36. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 36
    NE Business Overview NE Overview Key Locations Designs and fabricates components / systems Highly complex manufacturing and component design capability Only large commercial nuclear manufacturer in North America Supplied more…
  37. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 37
    NE Products and Services Nuclear Steam Supply System Design and Manufacturing Generation IV Advanced Nuclear Reactors TerraPower, X-Energy, StarCore Component Design, Engineering, and Licensing Services Specialty Nuclear Irradiated…
  38. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 38
    Geographic Coverage Canada France Romania U.S.A. Spain China South Korea Argentina Strong North American business with international presence 2015 BWX Technologies, Inc. All rights reserved. 39
  39. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 39
    Steam Generator Services Market Analysis U.S. Market Analysis Developed a significant technological advantage with advanced tooling resulting from significant Capital / R&D investment over the past 5 years Captured 25% market…
  40. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 40
    TSG & NE Financials Business Status Update TSG & NE Revenue (1) 20122014 market decline driven by M completion of life extensions, reduced capital 500 441 434 and O&M spend, and new build investment 388 (Fukushima, gas prices,…
  41. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 41
    Financial Review David S. Black Senior Vice President and Chief Financial Officer
  42. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 42
    Select Financial Information (Unaudited) Select Financial Information (M) 2012 2013 2014 Revenue 1,523 1,547 1,451 GAAP Operating Income 172 307 19 Pension & OPEB MTM (Gain) / Loss 23 (131) 141 GCI & Other Restructuring…
  43. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 43
    Revenue Summary Segment (M) 2012 % 2013 % 2014 % Nuclear Operations 1,098 72% 1,168 76% 1,221 84% Nuclear Energy 326 21% 284 18% 155 11% Technical Services 108 7% 104 7% 85 6% (Primarily equity income) Eliminations & Other…
  44. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 44
    Backlog Segment (M) 2012 % 2013 % 2014 % (1) Nuclear Operations 2,984 91% 2,369 94% 2,778 91% Nuclear Energy 278 9% 142 6% 265 9% Other (2) 4 - 7 - 3 - Total Backlog 3,266 2,518 3,046 (1) Notes: 1) Decline in 2013…
  45. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 45
    Adjusted Operating Income Segment (M) 2012 2013 2014 Nuclear Operations 226 238 270 Nuclear Energy 51 9 (23)(1) Technical Services 60 58 35 Other (2) (142) (108) (63) Total Adjusted Operating Income 195 197 219 Notes:…
  46. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 46
    Balanced Capital Allocation Organic growth Dividends Disciplined, Return- Share repurchases Driven Capital Allocation Focused M&A Maintain leverage at appropriate level to have allocation flexibility Initial dividend of…
  47. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 47
    Pro Forma Capitalization Pro Forma Capitalization (Provisional(1)) (M) 6/30/2015 Commentary Total Cash 80 Strong balance sheet at transaction close Revolver Draw 105 Standalone credit facility through 2020 Term Loan 293 400M…
  48. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 48
    Business Outlook Adjusted Operating Margin (1) 2015 Guidance % Nuclear Operations revenues consistent with levels achieved 20 in the last two years and expected operating margin in the 15.5 16.5 high teens 15.1 Technical Services…
  49. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 49
    Key Investment Highlights
  50. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 50
    BWXT Key Investment Highlights Critical platform for defense and energy applications Premier US Government and Leading supplier of nuclear design, equipment, components, fuel and specialty technical services to the energy market…
  51. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 51
    Q&A 2015 BWX Technologies, Inc. All rights reserved. 52
  52. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 52
    Appendix
  53. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 53
    Team Page John A. Fees Executive Chairman Mr. Fees was Chief Executive Officer (CEO) of McDermott International, Inc., a leading engineering and construction company with a focus on energy, from October 2008 until July 2010, at…
  54. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 54
    Team Page (contd) James D. Canafax Senior Vice President, General Counsel and Chief Compliance Officer Mr. Canafax has served as Senior Vice President and General Counsel of the Company since 2010 and as Chief Compliance Officer…
  55. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 55
    Team Page (contd) Jason S. Kerr Vice President, Chief Accounting Officer Prior to being elected to this position in 2015, he served as Corporate Controller for the Company with responsibility for external financial reporting and…
  56. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 56
    Business Segment Information - Revenue Twelve Months Ended De cember 31, 2012 2013 2014 REVENUES: Nuclear Operations 1,098,031 1,167,683 1,220,952 Technical Services 107,851 104,254 84,834 Nuclear Energy 325,655 283,857 154,721…
  57. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 57
    Business Segment Information Operating Income (Unaudited) Twe lve Months Ende d Dece mber 31, 2012 2013 2014 SEGMENT INCOME: Nuclear Operations 226,269 237,855 270,536 Technical Services 59,655 58,234 35,203 Nuclear Energy…
  58. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 58
    Business Segment Information Margin / Capital Expenditures Twe lve Months Ende d December 31, 2012 2013 2014 OPERATING MARGIN: Nuclear Operations 20.6% 20.4% 22.2% Technical Services 55.3% 55.9% 41.5% Nuclear Energy(1) 15.6%…
  59. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 59
    Reconciliation of Adjusted (Non-GAAP) Earnings per Share(1) (Unaudited) Earnings per Share () 2012 2013 2014 GAAP Earnings per Share 1.01 1.78 0.36 Pension & OPEB MTM (Gain) / Loss 0.13 (0.74) 0.82 Impairment (Gains) / Charges…
  60. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 60
    Reconciliation of EBITDA (Unaudited) (M) 2014 GAAP Net Income 39 Pension & OPEB MTM (Gain) / Loss 89 Impairment (Gains) / Charges (14) One-Time Tax (Benefit) / Charges (6) GCI & Other Restructuring Charges 28 Litigation…
  61. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 61
    Revenue and Backlog Recognition Revenue Recognition Backlog Recognition We generally recognize revenue and cost on a percentage- Backlog is generally recognized upon receipt of a written of-completion method document from the…
  62. JUNE 2015 INVESTOR PRESENTATION – Babcock & Wilcox Company – slide 62
    For more information, contact: M. Alan Nethery Vice President, Investor Relations investorsbwxt.com (980) 365-4300

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