Engineering & Capital Goods News

BWX TECHNOLOGIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)


The following information should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes thereto included in
Item 1 in Part I of this quarterly report on Form 10-Q ("Report"), as well as
the audited consolidated financial statements and the related notes and Item 7
of our annual report on Form 10-K for the year ended December 31, 2021 (our
"2021 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.

Cautionary Statement Concerning Forward-Looking Statements


From time to time, our management or persons acting on our behalf make
forward-looking statements to inform existing and potential security holders
about our Company. 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,
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, margin improvement initiatives or
impacts of the novel strain of coronavirus ("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 Company,
industries and business environment. 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 pandemic will continue to impact our business will depend on
future developments that are highly uncertain and cannot be predicted, including
the potential recurrence of COVID-19, subsequent waves or strains or the
emergence of similar diseases, the actions to contain the impact of such
diseases and potential responses to such actions by our suppliers, contractors
and employees. 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 Item 1A of our 2021 10-K, 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 and Item 1A of
our 2021 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 2021 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 two reportable segments: Government Operations and Commercial
Operations. Our reportable segments reflect changes we made during the first
quarter of 2022 to better align our businesses by their government and
commercial nature, which reflects the manner in which our operating segment
information is reported for purposes of assessing operating performance and
allocating resources. Prior to 2022, we reported three segments: Nuclear
Operations Group
, Nuclear Power Group and Nuclear Services Group.


Our Government Operations segment consists of our legacy Nuclear Operations
Group and Nuclear Services Group segments with certain research and development
activities in the areas of advanced reactors and advanced manufacturing. Our
Commercial Operations segment consists of our legacy Nuclear Power Group segment
with certain research and development and commercialization activities in the
areas of medical and industrial radioisotopes. Both segments now include
research and development and certain commercialization activities associated
with new technologies previously reported outside of our reportable segments.
The change in our reportable segments had no impact on our previously reported
consolidated results of
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operations, financial condition or cash flows. We have applied the change in
reportable segments to previously reported historical financial information and
related disclosures included in this Report.

In general, we operate in capital-intensive industries and rely on large
contracts for a substantial amount of our revenues. We are currently exploring
growth strategies across our segments to expand and complement our existing
businesses. We would expect to fund these opportunities with cash generated from
operations or by raising additional capital through debt, equity or some
combination thereof.

Government Operations


The revenues of our Government Operations 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 U.S. Department of Energy ("DOE")/National Nuclear Safety
Administration's Naval Nuclear Propulsion Program. In addition, we perform
fabrication activities for missile launch tubes for U.S. Navy submarines and
supply proprietary and sole-source valves, manifolds and fittings to global
naval and ship customers. As a supplier of major nuclear components for certain
U.S. Government programs, this segment is a significant participant in the
defense industry.

This segment also provides various services to the U.S. Government by managing
and operating high-consequence operations at U.S. nuclear weapons sites,
national laboratories and manufacturing complexes. The revenues and equity in
income of investees under these types of contracts are largely a function of
spending of the U.S. Government and the performance scores we and our consortium
partners earn in managing and operating these sites. With our specialized
capabilities of full life-cycle management of special materials, facilities and
technologies, we believe this segment is well-positioned to continue
participating in the ongoing cleanup, operation and management of critical
government-owned nuclear sites, laboratories and manufacturing complexes
maintained by the DOE, NASA and other federal agencies.

Additionally, 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.

Commercial Operations


Through this segment, we design and manufacture commercial nuclear steam
generators, heat exchangers, pressure vessels, reactor components, 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 global manufacturer and supplier of critical medical
radioisotopes and radiopharmaceuticals.

Our Commercial Operations segment's overall activity primarily depends on the
demand and competitiveness of nuclear energy and the demand for radioisotopes
and radiopharmaceuticals for research, diagnostic and therapeutic uses. A
significant portion of our Commercial Operations segment's operations depends on
the timing of maintenance 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.

Acquisition of Dynamic Controls Limited and Citadel Capital Corporation


On April 11, 2022, our subsidiary BWXT Government Group, Inc. acquired all of
the outstanding stock of U.K.-based Dynamic Controls Limited ("Dynamic") and
U.S.-based Citadel Capital Corporation, along with its wholly-owned subsidiary,
Cunico Corporation ("Cunico"). Dynamic and Cunico are suppliers of
highly-engineered, proprietary valves, manifolds and fittings for global naval
nuclear and diesel-electric submarines, surface warfare ships and commercial
shipping vessels. These companies are reported as part of our Government
Operations segment.

For additional information on the acquisition of Dynamic and Cunico, see Note 2
to our condensed consolidated financial statements included in this Report.

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Critical Accounting 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 of our 2021 10-K. There have been no material changes to our critical
accounting policies and estimates during the nine months ended September 30,
2022.

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, 2022, 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 the cost of labor,
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 and nine months ended September 30, 2022, we recognized net
changes in estimates related to contracts that recognize revenue over time,
which increased (decreased) operating income by approximately $4.2 million and
$(1.1) million, respectively. Included in these amounts are contract adjustments
for cost overruns related to the manufacture of non-nuclear components being
produced within our Government Operations segment. We have recognized a decrease
in operating income of $11.3 million for the nine months ended September 30,
2022 related to this matter. These contract adjustments resulted in a decrease
in earnings per share of $0.09 for the nine months ended September 30, 2022. We
are exploring opportunities for recovery of cost overruns related to this
project. During the three and nine months ended September 30, 2021, we
recognized net changes in estimates related to contracts that recognize revenue
over time, which increased operating income by approximately $18.1 million and
$27.8 million, respectively.

COVID-19 Assessment

General

We continue to monitor the COVID-19 pandemic and its impacts and potential
impacts on our business. We continue to operate our facilities and have taken
numerous precautions to mitigate exposure and protect the health and well-being
of our workforce, including arranging for the vaccination of our workforce,
where possible. To date, we have experienced localized operational challenges as
a result of employee illness, quarantines and social distancing protocols, but
the severity of these impacts has subsided significantly. Because developments
related to the spread of COVID-19 and its impacts continue to change, it is
difficult to predict any future impact at this time. Additionally, COVID-19 may
also adversely impact our supply chain and other manufacturers, which could
delay our receipt of essential goods and services. Any number of these potential
risks could have a material adverse effect on our financial condition, results
of operations and cash flows.

Government Assistance

On March 27, 2020, the U.S. Government enacted the Coronavirus Aid, Relief and
Economic Security Act, which, among other things, provides employers an option
to defer payroll tax payments for a limited period. As of September 30, 2022, we
have deferred $10.7 million of payroll taxes which are due by January 2023.
Additionally, on April 11, 2020, the Canadian Government enacted the Canada
Emergency Wage Subsidy ("CEWS") under the COVID-19 Economic Response Plan to
prevent large layoffs and help employers offset a portion of their employee
salaries and wages for a limited period. During the nine months ended
September 30, 2022, we recognized subsidies under the CEWS as an offset to
operating expenses of $0.6 million, compared to $0.7 million and $4.9 million
during the three and nine months ended September 30, 2021, respectively. The
timeframe for submitting new claims under the CEWS ended in May 2022, and we do
not expect to qualify for further assistance under this program.
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Results of Operations – Three and Nine Months Ended September 30, 2022 vs. Three
and Nine Months Ended September 30, 2021

Selected financial highlights are presented in the table below:

                                Three Months Ended                            Nine Months Ended
                                  September 30,                                 September 30,
                               2022           2021         $ Change         2022             2021          $ Change
                                                                 (In thousands)
REVENUES:
Government Operations       $ 422,521      $ 417,139      $  5,382      $ 1,290,835      $ 1,245,911      $ 44,924
Commercial Operations         101,794         83,382        18,412          320,266          292,622        27,644

Eliminations                     (604)        (1,794)        1,190           (2,444)          (6,434)        3,990
                            $ 523,711      $ 498,727      $ 24,984      $ 1,608,657      $ 1,532,099      $ 76,558
OPERATING INCOME:
Government Operations       $  77,735      $  87,542      $ (9,807)     $   233,749      $   238,658      $ (4,909)
Commercial Operations           6,847          4,925         1,922           23,673           16,859         6,814

                            $  84,582      $  92,467      $ (7,885)     $   257,422      $   255,517      $  1,905
Unallocated Corporate          (4,704)        (4,999)          295          (10,734)         (11,884)        1,150
Total Operating Income      $  79,878      $  87,468      $ (7,590)     $   246,688      $   243,633      $  3,055

Consolidated Results of Operations

Three months ended September 30, 2022 vs. 2021


Consolidated revenues increased 5.0%, or $25.0 million, to $523.7 million in the
three months ended September 30, 2022 compared to $498.7 million for the
corresponding period of 2021, due to increases in our Government Operations and
Commercial Operations segments of $5.4 million and $18.4 million, respectively.

Consolidated operating income decreased $7.6 million to $79.9 million in the
three months ended September 30, 2022 compared to $87.5 million for the
corresponding period of 2021. Operating income in our Government Operations
segment decreased $9.8 million, which was partially offset by an increase in
operating income in our Commercial Operations segment of $1.9 million and lower
Unallocated Corporate expenses of $0.3 million when compared to the
corresponding period of the prior year.

Nine months ended September 30, 2022 vs. 2021


Consolidated revenues increased 5.0%, or $76.6 million, to $1,608.7 million in
the nine months ended September 30, 2022 compared to $1,532.1 million for the
corresponding period of 2021, due to increases in our Government Operations and
Commercial Operations segments of $44.9 million and $27.6 million, respectively.

Consolidated operating income increased $3.1 million to $246.7 million in the
nine months ended September 30, 2022 compared to $243.6 million for the
corresponding period of 2021. Operating income in our Commercial Operations
segment increased by $6.8 million in addition to lower Unallocated Corporate
expenses of $1.2 million when compared to the corresponding period of the prior
year. These increases were partially offset by a decrease in operating income in
our Government Operations segment of $4.9 million.

Government Operations

                          Three Months Ended                            Nine Months Ended
                            September 30,                                 September 30,
                         2022           2021         $ Change         2022             2021          $ Change
                                                           (In thousands)
Revenues              $ 422,521      $ 417,139      $  5,382      $ 1,290,835      $ 1,245,911      $ 44,924
Operating Income      $  77,735      $  87,542      $ (9,807)     $   233,749      $   238,658      $ (4,909)
% of Revenues               18.4%          21.0%                          18.1%            19.2%


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Three months ended September 30, 2022 vs. 2021


Revenues increased $5.4 million, or 1.3%, to $422.5 million in the three months
ended September 30, 2022 compared to $417.1 million for the corresponding period
of 2021. The increase was primarily related to additional volume in the
manufacture of nuclear components for U.S. Government programs, which was
partially offset by the timing of the procurement of certain long-lead materials
when compared to the corresponding period of the prior year.

Operating income decreased $9.8 million to $77.7 million in the three months
ended September 30, 2022 compared to $87.5 million for the corresponding period
of 2021. The decrease was primarily related to lower levels of favorable
contract adjustments of $14.1 million when compared to the corresponding period
of the prior year. These decreases were partially offset by the operating income
impact of the changes in revenues noted above in addition to an increase in
operating income of $4.3 million associated with our joint venture activities,
which include the Savannah River Site Integrated Mission Completion Contract
that was awarded in 2021.

Nine months ended September 30, 2022 vs. 2021


Revenues increased 3.6%, or $44.9 million, to $1,290.8 million in the nine
months ended September 30, 2022 compared to $1,245.9 million for the
corresponding period of 2021. The increase was primarily related to additional
volume in the manufacture of nuclear components for U.S. Government programs and
the timing of the procurement of certain long-lead materials totaling $46.3
million when compared to the corresponding period of the prior year. We also
experienced an increase in revenues of $9.1 million related to continued growth
in design and engineering work executed by our advanced technologies business,
particularly in the defense and space markets. These increases were offset by a
reduction in volume related to missile tubes totaling $24.5 million.

Operating income decreased $4.9 million to $233.7 million in the nine months
ended September 30, 2022 compared to $238.7 million for the corresponding period
of 2021. The decrease was primarily related to lower levels of favorable
contract adjustments of $34.1 million, inclusive of an $11.3 million adjustment
related to the manufacture of non-nuclear components, which was recorded in the
second quarter of 2022. These decreases were partially offset by the operating
income impact of the changes in revenues noted above in addition to an increase
in operating income of $9.3 million associated with our joint venture
activities, which include the Savannah River Site Integrated Mission Completion
Contract that was awarded in 2021.

Commercial Operations

                          Three Months Ended                          Nine Months Ended
                            September 30,                               September 30,
                          2022           2021        $ Change        2022           2021         $ Change
                                                         (In thousands)
Revenues              $  101,794      $ 83,382      $ 18,412      $ 320,266      $ 292,622      $ 27,644
Operating Income      $    6,847      $  4,925      $  1,922      $  23,673      $  16,859      $  6,814
% of Revenues                 6.7%          5.9%                         7.4%           5.8%


Three months ended September 30, 2022 vs. 2021


Revenues increased 22.1%, or $18.4 million, to $101.8 million in the three
months ended September 30, 2022 compared to $83.4 million for the corresponding
period of 2021. The increase was primarily related to higher levels of in-plant
inspection, maintenance and modification services totaling $19.0 million as well
as higher levels of revenue in our nuclear fuel handling business. These
increases were partially offset by decreased revenues in our fuel fabrication
business of $3.6 million when compared to the corresponding period of the prior
year.

Operating income increased $1.9 million to $6.8 million in the three months
ended September 30, 2022 compared to $4.9 million for the corresponding period
of 2021, due to the operating income impact of the changes in revenues noted
above as well as a favorable shift in our project and product line mix when
compared to the corresponding period of the prior year. These operating income
improvements were partially offset by a $2.0 million gain resulting from the
settlement of contingent consideration associated with a prior acquisition,
which was recorded in the prior year.

Nine months ended September 30, 2022 vs. 2021


Revenues increased 9.4%, or $27.6 million, to $320.3 million in the nine months
ended September 30, 2022 compared to $292.6 million for the corresponding period
of 2021. The increase was primarily related to higher levels of in-plant
inspection, maintenance and modification services totaling $24.5 million as well
as higher levels of revenue in our nuclear fuel handling
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and medical radioisotopes businesses. These increases were partially offset by
decreased revenues in our fuel fabrication and parts manufacturing businesses
when compared to the corresponding period of the prior year.

Operating income increased $6.8 million to $23.7 million in the nine months
ended September 30, 2022 compared to $16.9 million for the corresponding period
of 2021, due to the operating income impact of the changes in revenues noted
above as well as a favorable shift in our project and product line mix when
compared to the corresponding period of the prior year. In addition, we
experienced higher levels of favorable contract adjustments when compared to the
corresponding period of the prior year. These increases were partially offset by
a $4.3 million decrease in wage subsidies we received under the CEWS to offset
the effects of COVID-19 on our Canadian operations when compared to the
corresponding period of the prior year, restructuring related costs of $1.8
million in addition to a $2.0 million gain resulting from the settlement of
contingent consideration associated with a prior acquisition, which was recorded
in the prior year.

Unallocated Corporate

Unallocated corporate expenses in the three months ended September 30, 2022 were
relatively unchanged when compared to the corresponding period of 2021.


Unallocated corporate expenses decreased $1.2 million in the nine months ended
September 30, 2022 compared to the corresponding period of 2021, primarily due
to a decrease in healthcare costs, which were partially offset by an increase in
legal and consulting costs associated with due diligence activities.

Provision for Income Taxes


                                             Three Months Ended                                       Nine Months Ended
                                                September 30,                                           September 30,
                                           2022               2021            $ Change             2022               2021            $ Change
                                                                                    (In thousands)
Income before Provision for
Income Taxes                           $   82,022          $ 77,769          $  4,253          $ 257,569          $ 248,593          $  8,976
Provision for Income Taxes             $   20,185          $ 17,611          $  2,574          $  61,977          $  59,211          $  2,766
Effective Tax Rate                             24.6%             22.6%                                24.1%              23.8%


We primarily operate in the U.S., Canada, and the U.K. and recognize our U.S.
income tax provision based on the U.S. federal statutory rate of 21%, our
Canadian tax provision based on the Canadian local statutory rate of
approximately 25%, and our U.K. tax provision based on the U.K. local statutory
rate of 19%.

Our effective tax rate for the three months ended September 30, 2022 was 24.6%
as compared to 22.6% for the three months ended September 30, 2021. The
effective tax rate for the three months ending September 30, 2022 was higher
than the effective tax rate for the three months ending September 30, 2021
primarily due to a decrease in eligible research and development expenses. Our
effective tax rate for the nine months ended September 30, 2022 was 24.1% as
compared to 23.8% for the nine months ended September 30, 2021. The effective
tax rates for the three and nine months ended September 30, 2022 and 2021 were
higher than the U.S. corporate income tax rate of 21% primarily due to state
income taxes within the U.S. and the unfavorable rate differential associated
with our Canadian earnings.

Backlog


Backlog represents the dollar amount of revenue we expect to recognize in the
future from contracts awarded and in progress. Not all of our expected revenue
from a contract award is recorded in backlog for a variety of reasons, including
that some projects are awarded and completed within the same reporting period.

Our backlog is equal to our remaining performance obligations under contracts
that meet the criteria in 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 Government Operations segment. Backlog may not be
indicative of future operating results, and projects in our backlog may be
cancelled, modified or otherwise altered by customers.

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                            September 30,       December 31,
                                 2022               2021
                                (In approximate millions)
Government Operations      $        3,686      $       4,532
Commercial Operations                 633                644

Total Backlog              $        4,319      $       5,176

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


At September 30, 2022, our ending backlog was $4,318.9 million, which included
$104.3 million of unfunded backlog related to U.S. Government contracts. We
expect to recognize approximately 46% of the revenue associated with our backlog
by the end of 2023, with the remainder to be recognized thereafter.

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.

The value of unexercised options excluded from backlog as of September 30, 2022,
was approximately $0.4 billion, which is expected to be awarded in annual
installments through 2024, 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, which
amended the Credit Agreement dated as of May 24, 2018 (as amended, the "Credit
Facility") with Wells Fargo Bank, N.A., as administrative agent, and the other
lenders party thereto. The Credit Facility provides for a $750 million senior
secured revolving credit facility (the "Revolving Credit Facility"). All
obligations under the Revolving Credit Facility were scheduled to mature on
March 24, 2025. The proceeds of loans under the Revolving Credit Facility were
available for working capital needs, permitted acquisitions and other general
corporate purposes.

The Credit Facility allowed 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 the term loans, plus (3) additional amounts provided the Company
was 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 were guaranteed, subject to
certain exceptions, by substantially all of the Company's present and future
wholly owned domestic restricted subsidiaries. The Credit Facility was secured
by first-priority liens on certain assets owned by the Company and its
subsidiary guarantors (other than the majority of its subsidiaries comprising
its Government Operations segment).

The Revolving Credit Facility required interest payments on revolving loans on a
periodic basis until maturity. We could 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 included financial covenants that were tested on a quarterly
basis, based on the rolling four-quarter period that ended on the last day of
each fiscal quarter. The maximum permitted leverage ratio was 4.00 to 1.00,
which could 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 was 3.00 to 1.00. In addition, the Credit Facility contained
various restrictive covenants, including with respect to debt, liens,
investments, mergers, acquisitions, dividends, equity repurchases and asset
sales. As of September 30, 2022, we were in compliance with all covenants set
forth in the Credit Facility.

Outstanding loans under the Revolving Credit Facility bore 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 were charged a commitment fee on the unused portion of the Revolving
Credit Facility, and that fee ranged from 0.15% to 0.225% per year.
Additionally, we were charged a letter of credit fee of between 1.0% and 1.75%
per year with respect to the amount of
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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 varied quarterly based on our leverage ratio. Based on the
leverage ratio applicable at September 30, 2022, the margin for Eurocurrency
rate and base rate revolving loans was 1.50% and 0.50%, respectively, the letter
of credit fee for financial letters of credit and performance letters of credit
was 1.50% and 0.90%, respectively, and the commitment fee for the unused portion
of the Revolving Credit Facility was 0.20%.

As of September 30, 2022, borrowings and letters of credit issued under the
Revolving Credit Facility totaled $550.0 million and $37.1 million,
respectively. As a result, as of September 30, 2022 we had $162.9 million
available under the Revolving Credit Facility for borrowings and to meet letter
of credit requirements. As of September 30, 2022, the interest rate on
outstanding borrowings under our Credit Facility was 4.27%.


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 would immediately become due and payable; (2) if any other
event of default exists, the lenders would be permitted to accelerate the
maturity of the related obligations outstanding; and (3) if any event of default
exists, the lenders would 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 were unable to make
any of the representations and warranties in the Credit Facility, we would be
unable to borrow funds or have letters of credit issued under the Credit
Facility.

Amended and Restated Credit Agreement


On October 12, 2022, we entered into an Amended and Restated Credit Agreement
(the "New Credit Facility") with Wells Fargo Bank, National Association, as
administrative agent, and the other lenders party thereto, which amended and
restated the Credit Facility. The New Credit Facility includes a $750 million
senior secured revolving credit facility (the "New Revolving Credit Facility")
and a $250 million senior secured term A loan (the "New Term Loan"). The New
Revolving Credit Facility and the New Term Loan are scheduled to mature on
October 12, 2027. All proceeds from the New Term Loan were used to repay
outstanding indebtedness under the Credit Facility.

As of October 12, 2022, outstanding borrowings under the New Credit Facility
totaled $570.0 million, comprising $250.0 million under the New Term Loan and
$320.0 million under the New Revolving Credit Facility, and letters of credit
issued under the New Revolving Credit Facility totaled $37.1 million. As a
result, as of October 12, 2022, the Company had $392.9 million available under
the New Revolving Credit Facility for borrowings and to meet letter of credit
requirements.

Senior Notes due 2028

We issued $400 million aggregate principal amount of 4.125% senior notes due
2028 (the "Senior Notes due 2028") pursuant to an indenture dated June 12, 2020
(the "2020 Indenture"), among the Company, certain of our subsidiaries, as
guarantors, and U.S. Bank Trust Company, National Association (formerly known as
U.S. Bank National Association) ("U.S. Bank"), as trustee. The Senior Notes due
2028 are guaranteed by each of the Company's present and future direct and
indirect wholly owned domestic subsidiaries that is a guarantor under the Credit
Facility.

Interest on the Senior Notes due 2028 is payable semi-annually in cash in
arrears on June 30 and December 30 of each year at a rate of 4.125% per annum.
The Senior Notes due 2028 will mature on June 30, 2028.


We may redeem the Senior Notes due 2028, in whole or in part, at any time on or
after June 30, 2023 at a redemption price equal to (i) 102.063% of the principal
amount to be redeemed if the redemption occurs during the twelve-month period
beginning on June 30, 2023, (ii) 101.031% of the principal amount to be redeemed
if the redemption occurs during the twelve-month period beginning on June 30,
2024 and (iii) 100.0% of the principal amount to be redeemed if the redemption
occurs on or after June 30, 2025, in each case plus accrued and unpaid interest,
if any, to, but excluding, the redemption date. At any time prior to June 30,
2023, we may also redeem up to 40.0% of the Senior Notes due 2028 with net cash
proceeds of certain equity offerings at a redemption price equal to 104.125% of
the principal amount of the Senior Notes due 2028 to be redeemed, plus accrued
and unpaid interest, if any, to, but excluding, the redemption date. In
addition, at any time prior to June 30, 2023, we may redeem the Senior Notes due
2028, in whole or in part, at a redemption price equal to 100.0% of the
principal amount of the Senior Notes due 2028 to be redeemed, plus accrued and
unpaid interest, if any, to, but excluding, the redemption date plus an
applicable "make-whole" premium.
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The 2020 Indenture contains customary events of default, including, among other
things, payment default, failure to comply with covenants or agreements
contained in the 2020 Indenture or the Senior Notes due 2028 and certain
provisions related to bankruptcy events. The 2020 Indenture also contains
customary negative covenants. As of September 30, 2022, we were in compliance
with all covenants set forth in the 2020 Indenture and the Senior Notes due
2028.

Senior Notes due 2029


We issued $400 million aggregate principal amount of 4.125% senior notes due
2029 (the "Senior Notes due 2029") pursuant to an indenture dated April 13, 2021
(the "2021 Indenture"), among the Company, certain of our subsidiaries, as
guarantors, and U.S. Bank, as trustee. The Senior Notes due 2029 are guaranteed
by each of the Company's present and future direct and indirect wholly owned
domestic subsidiaries that is a guarantor under the Credit Facility.

Interest on the Senior Notes due 2029 is payable semi-annually in cash in
arrears on April 15 and October 15 of each year, at a rate of 4.125% per annum.
The Senior Notes due 2029 will mature on April 15, 2029.


We may redeem the Senior Notes due 2029, in whole or in part, at any time on or
after April 15, 2024 at a redemption price equal to (i) 102.063% of the
principal amount to be redeemed if the redemption occurs during the twelve-month
period beginning on April 15, 2024, (ii) 101.031% of the principal amount to be
redeemed if the redemption occurs during the twelve-month period beginning on
April 15, 2025 and (iii) 100.0% of the principal amount to be redeemed if the
redemption occurs on or after April 15, 2026, in each case plus accrued and
unpaid interest, if any, to, but excluding, the redemption date. At any time
prior to April 15, 2024, we may also redeem up to 40.0% of the Senior Notes due
2029 with net cash proceeds of certain equity offerings at a redemption price
equal to 104.125% of the principal amount of the Senior Notes due 2029 to be
redeemed, plus accrued and unpaid interest, if any, to, but excluding, the
redemption date. In addition, at any time prior to April 15, 2024, we may redeem
the Senior Notes due 2029, in whole or in part, at a redemption price equal to
100.0% of the principal amount of the Senior Notes due 2029 to be redeemed, plus
accrued and unpaid interest, if any, to, but excluding, the redemption date plus
an applicable "make-whole" premium.

The 2021 Indenture contains customary events of default, including, among other
things, payment default, failure to comply with covenants or agreements
contained in the 2021 Indenture or the Senior Notes due 2029 and certain
provisions related to bankruptcy events. The 2021 Indenture also contains
customary negative covenants. As of September 30, 2022, we were in compliance
with all covenants set forth in the 2021 Indenture and the Senior Notes due
2029.

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, 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, 2022, bonds issued and outstanding under these arrangements
totaled approximately $112.7 million.

Long-term Benefit Obligations


As of September 30, 2022, we had underfunded defined benefit pension and
postretirement benefit plans with obligations totaling approximately $74.2
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 $8.0
million for the remainder of 2022 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.
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Other

Cash, Cash Equivalents, Restricted Cash and Investments


Our domestic and foreign cash and cash equivalents, restricted cash and cash
equivalents and investments as of September 30, 2022 and December 31, 2021 were
as follows:

               September 30,       December 31,
                    2022               2021
                        (In thousands)
Domestic      $       43,030      $      39,128
Foreign               25,486             14,016
Total         $       68,516      $      53,144

Our working capital increased by $128.8 million to $442.9 million at
September 30, 2022 from $314.1 million at December 31, 2021, primarily
attributable to an increase in cash and cash equivalents as well as the timing
of project cash flows and vendor payments.


Our net cash provided by operating activities decreased by $88.5 million to
$137.0 million in the nine months ended September 30, 2022, compared to $225.6
million in the nine months ended September 30, 2021. The decrease in cash
provided by operating activities was primarily attributable to an $88.7 million
customer payment delayed until the first quarter of 2021, which was originally
expected in 2020.

Our net cash used in investing activities decreased by $41.0 million to $193.1
million in the nine months ended September 30, 2022, compared to $234.1 million
in the nine months ended September 30, 2021. The decrease in cash used in
investing activities was primarily attributable to a decrease in purchases of
property, plant and equipment of $102.1 million, which was partially offset by
the $47.3 million acquisition of Dynamic and Cunico as well as a $11.5 million
increase in investments in equity method investees in the nine months ended
September 30, 2022.

Our net cash provided by financing activities increased by $40.9 million to
$76.3 million in the nine months ended September 30, 2022, compared to $35.4
million in the nine months ended September 30, 2021. The increase in cash
provided by financing activities was primarily attributable to a reduction in
repurchases of common stock of $165.8 million when compared to the corresponding
period of the prior year and the repayment of bank overdrafts of $88.7 million
in the nine months ended September 30, 2021. This increase was partially offset
by a reduction in net borrowings of long-term debt of $240.0 million when
compared to the corresponding period of the prior year.

At September 30, 2022, we had restricted cash and cash equivalents totaling $5.5
million, $2.6 million of which was held for future decommissioning of facilities
(which is included in other assets on our condensed consolidated balance sheets)
and $2.9 million of which was held to meet reinsurance reserve requirements of
our captive insurer.

At September 30, 2022, we had short-term and long-term investments with a fair
value of $11.6 million. Our investment portfolio consists primarily of U.S.
Government and agency securities, corporate bonds and mutual funds. Our debt
securities are carried at fair value and are either classified as trading, with
unrealized gains and losses reported in earnings, or as available-for-sale, with
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.

Cash Requirements


Our cash requirements have not changed materially from those disclosed in Item 7
of our 2021 10-K. We believe we have sufficient cash and cash equivalents and
borrowing capacity, along with cash generated from operations and continued
access to debt markets, to satisfy our cash requirements for the next 12 months
and beyond.

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