BWX Technologies, Inc.BWXT

Economic and market conditions · Consumer spending and confidence

Demand for our products and services has been, and we expect that demand will continue to be, subject to significant fluctuations due to a variety of factors beyond our control, including economic and industry conditions. These factors include, but are not limited to, inflation, geopolitical issues, the availability and cost of credit, the demand for and competitiveness of nuclear power with other energy sources, the cyclical nature of the power generation industry, low business and consumer confidence, high unemployment.

Natural and catastrophic events · Pandemic and public health crises

Actual or threatened public health epidemics, pandemics or outbreaks, such as COVID-19, could have a material adverse effect on our business and results of operations. By disrupting our employees, suppliers, contractors, customers or facilities through illness, quarantines, government-mandated shutdowns, cost increases, operational restrictions, and unfavorable contract impacts that may not be fully recoverable through insurance or government assistance.

Economic and market conditions · Credit market conditions

Our customers may find it more difficult to raise capital in the future due to limitations on the availability of credit, increases in interest rates and other factors affecting the federal, municipal and corporate credit markets. Additionally, our customers may demand more favorable pricing terms and find it increasingly difficult to timely pay invoices for our products and services.

Market position and competition · Market cyclicality and demand volatility

Our future business prospects in Canada are dependent upon the continued operation of Canadian nuclear plants and refurbishment of the majority of the plants in Ontario to extend their operating lives. Unfavorable economic conditions, competition from other forms of power generation, increased competition for refurbishment contracts, changes in government policy or operational or project execution issues may lead nuclear plant operators in Canada to cease operations or delay, curtail or cancel proposed or existing life-extension projects.

Innovation and product development · Intellectual property protection and infringement

We rely on intellectual property law and confidentiality agreements to protect our intellectual property. We also rely on intellectual property we license from third parties. Failure to protect our intellectual property rights, alleged infringement of third-party intellectual property rights or our inability to obtain or renew licenses to use intellectual property of third parties, could adversely affect our business.

Innovation and product development · Product development and randd investment risks

Our business strategy also includes development and commercialization of new technologies to support our growth, which requires significant investment and involves various risks and uncertainties. These new technologies may not achieve desired commercial or financial results. Our future growth will depend on our ability to continue to innovate by developing and commercializing new product and service offerings.

Strategic execution · Merger acquisition and divestiture risks

Our business strategy includes acquisitions and strategic investments to support our growth, which can create certain risks and uncertainties. We intend to pursue growth through the acquisition of, or strategic investments in, businesses or assets that we believe will enable us to strengthen our existing business and expand into adjacent industries. We may be unable to execute this growth strategy if we cannot identify suitable businesses or assets, reach agreement on potential strategic transactions on acceptable terms or for other reasons.

Strategic execution · Joint venture and partnership risks

We conduct a portion of our operations through joint venture entities, over which we may have limited ability to influence. We currently have equity interests in several joint ventures and may enter into additional joint venture arrangements in the future. Our influence over some of these entities may be limited. Even in those joint ventures over which we do exercise significant influence, we are often required to consider the interests of our joint venture partners in connection with major decisions concerning the operations of the joint ventures.

Market position and competition · Pricing pressure and margin compression

We are subject to risks associated with contractual pricing in our industries, including the risk that, if our actual costs exceed the costs we estimate on our fixed-price contracts, our profitability will decline and we may suffer losses. Our actual costs on certain contracts have, and on other contracts could, exceed our projections, which has resulted, and may in the future also result in reduced profit or loss.

Project and contract management · Large contract concentration

Our backlog is subject to unexpected adjustments and cancellations and may not be a reliable indicator of future revenues or earnings. There can be no assurance that the revenues projected in our backlog will be realized or, if realized, will result in profits. Because of project cancellations or changes in project scope and schedule, we cannot predict with certainty when or if backlog will be performed.

Project and contract management · Project execution and delivery risks

These variations and the risks generally inherent in our industries may result in actual revenues or costs being different from those we originally estimated and may result in reduced profitability or losses on projects. Some of these risks include: difficulties encountered on our large-scale projects related to the procurement of materials or due to schedule disruptions, equipment performance failures, unforeseen site conditions, rejection clauses in customer contracts or other factors that may result in additional costs to us, reductions in revenue, claims or disputes.

Cybersecurity and data protection · Data breaches and cyber attacks

Our business could be negatively impacted by security threats, including physical and cybersecurity threats, and other disruptions. We face various security threats, including cyber threats, threats to the physical security of our facilities and infrastructure (including those that we manage and operate for our customers), and threats from terrorist acts, as well as the potential for business disruptions associated with these threats.

Capital structure and performance · Financial performance volatility

We recognize a large portion of our revenue on an over time basis which could result in volatility in our results of operations. We generally recognize revenues and profits under our long-term contracts on an over time basis. Accordingly, we review contract price and cost estimates regularly as the work progresses and reflect adjustments proportionate to our progress made towards completion in income in the period when we revise those estimates.

International and currency · Foreign exchange and currency exposure

We have significant manufacturing and sales operations in foreign countries, particularly in Canada. Our financial results may be adversely affected by fluctuations in foreign currencies and by the translation of the financial statements of our foreign subsidiaries from local currencies into U.S. dollars.

Credit and liquidity · Access to capital and financing

We may find it more difficult to raise capital in the future due to limitations on the availability of credit, increases in interest rates, changes in regulatory requirements, new investor requirements, such as stakeholder expectations regarding environmental, social and governance matters, and other factors affecting our access to the capital markets.

Industry regulation · Safety and environmental regulations

Our nuclear operations subject us to various environmental, regulatory, financial and other risks. Our operations in designing, engineering, manufacturing, supplying, constructing and maintaining nuclear fuel and nuclear power equipment and components subject us to various risks, including: potential liabilities relating to harmful effects on the environment and human health resulting from nuclear operations and the storage, handling and disposal of radioactive materials; unplanned expenditures relating to maintenance, operation, security, defects, upgrades and repairs required by the NRC, the CNSC and other government agencies.

Industry regulation · Fda drug and device approval

Among our opportunities involving new technologies, we are developing new medical radioisotope technology. The costs to develop and commercialize this technology require a substantial amount of investment over a period of years, and commercialization of this technology also requires authorizations from government agencies, including the U.S. Food and Drug Administration ('FDA'), Health Canada and the CNSC. There can be no assurance that we will be successful in addressing all of the technological challenges to developing and commercializing this technology or in obtaining the required authorizations from the FDA, Health Canada or the CNSC.

Industry regulation · Regulatory compliance and changes

If we fail to comply with government procurement laws and regulations, we could lose business and be liable for various penalties or sanctions. We must comply with laws and regulations relating to the formation, administration, and performance of U.S. Government contracts. These laws and regulations include the FAR, the Defense FAR Supplement ('DFARS'), the Truthful Cost or Pricing Data Act, the CAS national security laws, regulations, and orders restricting the use and dissemination of classified information, and U.S. export control laws governing the export of certain products and technical information.

Legal and litigation · Litigation and legal proceedings

We are involved in a number of legal proceedings. We cannot predict the outcome of litigation and other contingencies with certainty. Our business may be adversely affected by the outcome of legal proceedings, investigations, disputes and other contingencies that cannot be predicted with certainty.

Industry regulation · Licensing and permits

Our business requires us to obtain, and to comply with, federal, state and local government permits and approvals. Our business is required to obtain, and to comply with, federal, state and local government permits and approvals. Any of these permits or approvals may be subject to denial, revocation or modification under various circumstances. Failure to obtain or comply with the conditions of permits or approvals may adversely affect our operations by temporarily suspending our activities or curtailing our work and may subject us to penalties and other sanctions.