BWX TECHNOLOGIES, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - Insurance News

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 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.


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 length and severity of the COVID-19 health crisis, the potential recurrence
of COVID-19, subsequent waves or strains or the development 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 centrally, outside of our reportable
segments. The change in our reportable segments had no impact on our previously
reported consolidated results
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of 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 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.

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 leading 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.

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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 six months ended June 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 June 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 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 six months ended June 30, 2022, we recognized net changes
in estimates related to contracts that recognize revenue over time, which
decreased operating income by approximately $(0.1) million and $(5.3) 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 decreases in
operating income of $11.3 million for the three and six months ended June 30,
2022 related to this matter. These contract adjustments resulted in a decrease
in earnings per share of $0.09 for the three and six months ended June 30, 2022.
We are exploring opportunities for recovery of cost overruns related to this
project. During the three and six months ended June 30, 2021, we recognized net
changes in estimates related to contracts that recognize revenue over time,
which increased operating income by approximately $3.2 million and $9.7 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 June 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 six months ended June 30,
2022, we recognized subsidies under the CEWS as an offset to operating expenses
of $0.6 million, compared to $3.3 million and $4.2 million during the three and
six months ended June 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 Six Months Ended June 30, 2022 vs. Three and
Six Months Ended June 30, 2021

Selected financial highlights are presented in the table below:

                                Three Months Ended                             Six Months Ended
                                     June 30,                                      June 30,
                               2022           2021         $ Change         2022             2021          $ Change
                                                                 (In thousands)
REVENUES:
Government Operations       $ 436,537      $ 405,497      $ 31,040      $   868,314      $   828,772      $ 39,542
Commercial Operations         118,522        101,842        16,680          218,472          209,240         9,232

Eliminations                     (851)        (2,240)        1,389           (1,840)          (4,640)        2,800
                            $ 554,208      $ 505,099      $ 49,109      $ 1,084,946      $ 1,033,372      $ 51,574
OPERATING INCOME:
Government Operations       $  83,783      $  72,871      $ 10,912      $   156,014      $   151,116      $  4,898
Commercial Operations          12,864          5,640         7,224           16,826           11,934         4,892

                            $  96,647      $  78,511      $ 18,136      $   172,840      $   163,050      $  9,790
Unallocated Corporate          (1,410)        (4,760)        3,350           (6,030)          (6,885)          855
Total Operating Income      $  95,237      $  73,751      $ 21,486      $   166,810      $   156,165      $ 10,645

Consolidated Results of Operations

Three months ended June 30, 2022 vs. 2021


Consolidated revenues increased 9.7%, or $49.1 million, to $554.2 million in the
three months ended June 30, 2022 compared to $505.1 million for the
corresponding period in 2021, due to increases in our Government Operations and
Commercial Operations segments of $31.0 million and $16.7 million, respectively.

Consolidated operating income increased $21.5 million to $95.2 million in the
three months ended June 30, 2022 compared to $73.8 million for the corresponding
period of 2021. Operating income in our Government Operations and Commercial
Operations segments increased by $10.9 million and $7.2 million, respectively.
We also experienced lower Unallocated Corporate expenses of $3.4 million when
compared to the prior year.

Six months ended June 30, 2022 vs. 2021


Consolidated revenues increased 5.0%, or $51.6 million, to $1,084.9 million in
the six months ended June 30, 2022 compared to $1,033.4 million for the
corresponding period of 2021, due to increases in our Government Operations and
Commercial Operations segments of $39.5 million and $9.2 million, respectively.

Consolidated operating income increased $10.6 million to $166.8 million in the
six months ended June 30, 2022 compared to $156.2 million for the corresponding
period of 2021. Operating income in our Government Operations and Commercial
Operations segments increased by $4.9 million and $4.9 million, respectively. We
also experienced lower Unallocated Corporate expenses of $0.9 million when
compared to the prior year.

Government Operations

                          Three Months Ended                           Six Months Ended
                               June 30,                                    June 30,
                         2022           2021         $ Change        2022           2021         $ Change
                                                         (In thousands)
Revenues              $ 436,537      $ 405,497      $ 31,040      $ 868,314      $ 828,772      $ 39,542
Operating Income      $  83,783      $  72,871      $ 10,912      $ 156,014      $ 151,116      $  4,898
% of Revenues               19.2%          18.0%

18.0% 18.2%

Three months ended June 30, 2022 vs. 2021


Revenues increased $31.0 million, or 7.7%, to $436.5 million in the three months
ended June 30, 2022 compared to $405.5 million for the corresponding period of
2021. The increase was primarily related to additional volume in the
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manufacture of nuclear components for U.S. Government programs and the timing of
the procurement of certain long-lead materials totaling $34.9 million when
compared to the corresponding period in the prior year.


Operating income increased $10.9 million to $83.8 million in the three months
ended June 30, 2022 compared to $72.9 million for the corresponding period of
2021. The increase was due to the operating income impact of the changes in
revenues noted above in addition to a $4.1 million increase in equity income of
investees, primarily related to the Savannah River site that was awarded in
2021. These increases were partially offset by the year over year change in
favorable contract adjustments totaling $6.9 million, primarily related to
adjustments on our non-nuclear component manufacturing contract.

Six months ended June 30, 2022 vs. 2021


Revenues increased 4.8%, or $39.5 million, to $868.3 million in the six months
ended June 30, 2022 compared to $828.8 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 $41.4 million when compared
to the corresponding period in the prior year.

Operating income increased $4.9 million to $156.0 million in the six months
ended June 30, 2022 compared to $151.1 million for the corresponding period of
2021. The increase was due to the operating income impact of the changes in
revenues noted above in addition to a $4.5 million increase in equity income of
investees, primarily related to the Savannah River site that was awarded in
2021. These increases were partially offset by the year over year change in
favorable contract adjustments totaling $20.1 million, primarily related to
adjustments on our non-nuclear component manufacturing contract.

Commercial Operations

                          Three Months Ended                           Six Months Ended
                               June 30,                                    June 30,
                         2022           2021         $ Change        2022           2021         $ Change
                                                         (In thousands)
Revenues              $ 118,522      $ 101,842      $ 16,680      $ 218,472      $ 209,240      $  9,232
Operating Income      $  12,864      $   5,640      $  7,224      $  16,826      $  11,934      $  4,892
% of Revenues               10.9%           5.5%                         7.7%           5.7%

Three months ended June 30, 2022 vs. 2021


Revenues increased 16.4%, or $16.7 million, to $118.5 million in the three
months ended June 30, 2022 compared to $101.8 million for the corresponding
period of 2021. The increase was primarily related to higher levels of in-plant
inspection, maintenance and modification services totaling $14.0 million and
increases in revenue for our nuclear fuel handling and medical radioisotopes
product lines. These increases were partially offset by decreased revenues in
our fuel fabrication business of $4.4 million when compared to the same period
in the prior year.

Operating income increased $7.2 million to $12.9 million in the three months
ended June 30, 2022 compared to $5.6 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 same period in the prior year. These operating income improvements were
partially offset by a $3.3 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.

Six months ended June 30, 2022 vs. 2021


Revenues increased 4.4%, or $9.2 million, to $218.5 million in the six months
ended June 30, 2022 compared to $209.2 million for the corresponding period of
2021. The increase was primarily related to higher revenues in our nuclear fuel
handling business of $9.5 million, additional in-plant inspection, maintenance
and modification services as well as increases in revenue in our medical
radioisotopes businesses. These increases were partially offset by decreased
revenues in our parts manufacturing and fuel fabrication businesses when
compared to the same period in the prior year.

Operating income increased $4.9 million to $16.8 million in the six months ended
June 30, 2022 compared to $11.9 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 same period in the prior year. These increases were partially offset by a
$3.6 million decrease in wage subsidies we received under the CEWS to offset the
effects of
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COVID-19 on our Canadian operations when compared to the corresponding period of
the prior year in addition to restructuring related costs of $2.2 million
incurred during the six months ended June 30, 2022.

Unallocated Corporate


Unallocated corporate expenses decreased $3.4 million in the three months ended
June 30, 2022 compared to the corresponding period of 2021, primarily due to a
decrease in healthcare costs of $1.5 million and lower levels of compensation,
which were partially offset by an increase in legal and consulting costs related
to acquisition activities.

Unallocated corporate expenses decreased $0.9 million in the six months ended
June 30, 2022 compared to the corresponding period of 2021, primarily due to
lower levels of compensation, which were partially offset by restructuring
related costs and an increase in legal and consulting costs related to
acquisition activities.

Provision for Income Taxes

                                             Three Months Ended                                       Six Months Ended
                                                  June 30,                                                June 30,
                                           2022               2021            $ Change             2022               2021            $ Change
                                                                                    (In thousands)
Income before Provision for
Income Taxes                           $   98,099          $ 78,931

$ 19,168 $ 175,547 $ 170,824 $ 4,723
Provision for Income Taxes

             $   23,418          $ 19,522

$ 3,896 $ 41,792 $ 41,600 $ 192
Effective Tax Rate

                             23.9%             24.7%                                23.8%              24.4%


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 June 30, 2022 was 23.9% as
compared to 24.7% for the three months ended June 30, 2021. Our effective tax
rate for the six months ended June 30, 2022 was 23.8% as compared to 24.4% for
the six months ended June 30, 2021. The effective tax rates for the three and
six months ended June 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.

                               June 30,          December 31,
                                 2022                2021
                                (In approximate millions)
Government Operations      $     3,989          $       4,532
Commercial Operations              732                    644

Total Backlog              $     4,721          $       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.

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At June 30, 2022, our ending backlog was $4,720.7 million, which included
$89.6 million of unfunded backlog related to U.S. Government contracts. We
expect to recognize approximately 57% 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 June 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 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.

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 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 Credit Facility is 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 requires interest payments on revolving loans on a
periodic basis until maturity. 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 June 30,
2022, we were in compliance with all covenants set forth in the Credit Facility.

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 June 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 June 30, 2022, borrowings and letters of credit issued under the Revolving
Credit Facility totaled $590.0 million and $35.4 million, respectively. As a
result, as of June 30, 2022 we had $124.6 million available under the Revolving
Credit
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Facility for borrowings and to meet letter of credit requirements. As of
June 30, 2022, the interest rate on outstanding borrowings under our Credit
Facility was 2.77%.


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.

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.

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 June 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
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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 June 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 June 30, 2022, bonds issued and outstanding under these arrangements
totaled approximately $109.3 million.

Long-term Benefit Obligations


As of June 30, 2022, we had underfunded defined benefit pension and
postretirement benefit plans with obligations totaling approximately $78.3
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 $9.6
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.

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 June 30, 2022 and December 31, 2021 were as
follows:

               June 30,      December 31,
                 2022            2021
                     (In thousands)
Domestic      $ 58,665      $      39,128
Foreign         26,250             14,016
Total         $ 84,915      $      53,144

Our working capital increased by $129.2 million to $443.3 million at June 30,
2022 from $314.1 million at December 31, 2021, primarily attributable to an
increased cash balance and the timing of project cash flows and vendor payments.


Our net cash provided by operating activities decreased by $86.3 million to
$72.0 million in the six months ended June 30, 2022, compared to $158.3 million
in the six months ended June 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 $4.9 million to $164.8
million in the six months ended June 30, 2022, compared to $169.6 million in the
six months ended June 30, 2021. The decrease in cash used in investing
activities was primarily attributable to a decrease in purchases of property,
plant and equipment of $75.2 million, partially offset by the acquisition of
Dynamic and Cunico as well as a $22.6 million increase in investments in equity
method investees in the six months ended June 30, 2022.
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Our net cash provided by financing activities decreased by $34.4 million to
$125.0 million in the six months ended June 30, 2022, compared to $159.4 million
in the six months ended June 30, 2021. The decrease in cash provided by
financing activities was primarily attributable to a decrease in net borrowings
of long-term debt of $135.0 million in the six months ended June 30, 2022
compared to the corresponding period of the prior year. This was partially
offset by the repayment of bank overdrafts of $88.7 million in the six months
ended June 30, 2021.

At June 30, 2022, we had restricted cash and cash equivalents totaling $5.7
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 $2.9 million of which was held to meet reinsurance reserve requirements of
our captive insurer.

At June 30, 2022, we had short-term and long-term investments with a fair value
of $11.8 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.