Ladies and gentlemen, thank you for standing by and welcome to the BWX Technology Inc's Second Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the company's prepared remarks, we will conduct a question-and-answer session and instructions will be given at this time. I's would like to now turn the call over to the host, Mr. Alan Nethery BWXT's Vice President, Investor Relations and Corporate Procurement. Please go ahead sir. Alan Nethery - Vice President, Investor Relations & Corporate Procurement, BWX Technologies, Inc: Thank you, Ian, and good morning everyone. We appreciate you joining us to discuss our 2015 second quarter results which we reported yesterday afternoon. A copy of our press release is available on the Investor Relations section of our website at www.bwxt.com. Joining me this morning are John Fees, BWXT's Executive Chairman, Sandy Baker President and Chief Executive Officer and David Black, Senior Vice President and Chief Financial Officer. As always, please understand that certain matters discussed on today's call constitute forward-looking statements under Federal Security Laws. Forward-looking statements involve risk and uncertainties that are described in the Safe Harbor provision at the end of yesterday's press release and the risk factors section of our most recent 10-K and 10-Q filings. These risks and uncertainties may cause actual company results to differ materially. We undertake no obligation to update these forward-looking statements except required by law. On today's call we may also provide non-GAAP financial measures that are reconciled in the yesterday's earning release and our company overview presentation both of which are available on the Investor Relations section of BWXT.com. BWXT believes that non-GAAP measures provide meaningful insight into the company's operational performance and provides these measures to investors to help facilitate comparisons of operating results with prior periods and to assist them in understanding B&W's ongoing operations. With that, I will now turn the call over to John.

Thank you, Al and good morning everyone. Let me begin by saying it is my distinct pleasure to host this call, the first call what is now BWX Technologies or BWXT. It is an honor to have the opportunity once again to work with a strong leadership team alongside talented group of employees and growing such a reputable company. Also look forward to my continuing engagement with many of you all participating in this call. I am pleased to report that we are off to a great start. We successfully completed spin off of our former Power Generation business and have delivered solid second quarter results producing our expected $0.32 EPS after adjustments. Our commercial Nuclear segment had its best looking quarter in nearly five years and with the strategic win at NASA, we expanded outside of our traditional DoE service business by landing the same contract. Our pipeline for new order is robust and we have a number of exciting opportunities in front of us and we are financially strong. Each of our business segments continue to meet expectations in the second quarter and have greater momentum going forward, let me provide a few details. Consolidated revenues for the quarter were $357.1 million, 1.5% lower than the prior year's second quarter and adjusted earnings per share were $0.32 versus $0.35 in the second quarter of 2014. Non-GAAP operating income totaled $54.7 million for the period a 4% increase over the same quarter of 2014. As I indicated, these results were in line with our second quarter expectations. Our backlog is strong, and stands at $3 billion as of the end of June, $200 million higher than June of 2014. Bookings for the second quarter totaled $245.7 million which is double the second quarter 2014 bookings of $119.5 million. This is primarily attributable to a recent success in the Nuclear Energy segment related to an opportunity to serve a market in Asia. Before we get into the details of the operations of the segment opportunities which Sandy will present, let me turn it over to David who will discuss the segment results and other financial matters.

Thanks, John. The Nuclear Operations segment reported strong second quarter revenues of $291.8 million very close to the revenue of $293.4 million in the same quarter of 2014. The Nuclear Operations segment operating income in the quarter totaled $61.1 million, an increase of $2.5 million compared to $58.7 million in the prior year period. Return on sales was 21% compared to 20% in the same period of 2014. The increase is due to operational efficiency improvements. Backlog in Nuclear Operations at the end of the second quarter was $2.6 billion essentially unchanged from the same period last year. The Nuclear Energy segment revenues were $45.5 million in the second quarter of 2015 compared to revenues of $44.9 million in the corresponding period of 2014. The increased revenues in the current quarter was primarily due to an increase in our Nuclear Services business attributed to outage work both in Canada and the U.S. Operating income in the quarter increased by $0.8 million to $2.4 million in the second quarter compared to operating income of $1.5 million in the second quarter of 2014 primarily the result of improved operating performance in our Nuclear Services business and our ongoing efforts to restructure the segment to produce increased returns. Return on sales was 5.2% compared to the 3.4% in the same period of 2014. Our backlog position in this segment has strengthened significantly and there are a number of additional opportunities in the pipeline. Backlog at the end of the second quarter of 2015 was $380.5 million an increase of $188.1 compared to $192.5 million a year ago. This is our highest backlog in the nuclear energy segment since December of 2011. Operating income in Technical Services decreased $9.6 million to $5.5 million compared to $15.1 million in the corresponding period 2014, primarily due…

Thank you, Sandy. At our Investor Analyst Day held in June, we provided guidance for 2015 on a segment basis. That guidance remains unchanged. We expect the Nuclear Operations segment to achieve revenues consistent with the levels achieved in the last few years and operating margins to be in the high teens in the second half of this year. For TSG we anticipate achieving operating income in the range of $15 million to $20 million. We expect Nuclear Energy revenues to be between $150 of $175 million with an operating margin in the low single-digits. Given our year-to-date performance we are on track to deliver those results in each business. Additionally we are maintaining our expected 2015 EPS guidance of between $1.30 and $1.40 per share. To wrap up I would like to emphasize that the second quarter demonstrates the commitment, quality, and strength of our company, and more importantly of our employees and leadership team. As we successfully completed the spin-off of the former Power Generation business we remain focused on safe execution and delivering quality to our customers. Energy continues to be a solid core business with strong margins while NE has positioned itself well for margin improvement and TSG is on a path towards growth. We see good growth in all three of our segments to deliver EPS growth in the second half of the year and create value for our shareholders. That concludes our prepared remarks. I will now turn the call back over to the operator who will assist us in taking questions. Thank you.

Thank you. . It comes from the line of Bob Labick at CJS Securities. Please go ahead, Bob.

Good morning. Congratulations on a successful spin of PGG and a nice Q2. Peyton S. Baker - President, Chief Executive Officer & Director: Thank you, Bob.

Absolutely. Just to start. There was a recent article in the Wall Street Journal about Huntington Ingalls laying off people due to a lull in ship building for them. Given that you work closely with them, can you discuss if you're impacted, and if not how your build schedule would to be different than they? Peyton S. Baker - President, Chief Executive Officer & Director: Yes, that's a very good question. If you take a look at our procurements, our procurements are in advance of activities that happen in the shipyard proceeding sometimes for very many years. And as a result of that, there is a tremendous level of consistency that we have in our volumes as we foresee into the future on these programs. We typically don't have the kind of swings you would have with major programs coming in and going out on a cyclical – more cyclical type of basis. And so, it's a very big distinction between our business and some of the major aerospace and defense business it may have a thrust of volume and then change in the future. We have consistently seen in the past and expect consistently in the future to be able to be very reliably predict our volumes and not have big swings that would impact employment and volumes, that we could not foresee, anticipate in our landscape.

Okay, great. Thank you. And then, obviously very strong bookings in the Nuclear Energy side, is there anything rolling off or should that translate to accelerated growth and could you give us a sense of the kind of three or five year growth rate given those bookings and some of the exciting opportunities you just highlighted that you're bidding on for Nuclear Energy?

We feel that the increase of bookings in 2015 for the NE segment may allow us to have more robust revenues in 2016 and 2017 and beyond. We will be providing more revenue guidance as far as 2016 as we get further in the year. But we do anticipate that we will not see much of that in 2015 at all, but it will help us increase 2016 and 2017 to get us to our growth rate that we need to achieve. Peyton S. Baker - President, Chief Executive Officer & Director: It's very exciting for us that we have been able to successfully complete and we're not fully complete, but we are completing a cost restructuring and facility restructuring in that business. That combined with some very interesting bookings for us, it opens up some other potential markets for us is really terrific news and we're sort of at the forefront of that activity. I think the success in Asia has been very important and again we'll continue to pursue that, provide additional details as we go forward in this.

Okay, great. And then if I could sneak one last one in. You discussed some nice organic growth opportunities. Could you just remind us of your thoughts about M&A, the outlook, and then your capital allocation expectations or strategy going forward? Peyton S. Baker - President, Chief Executive Officer & Director: Well as we discussed in the Investor Day, our thinking has not changed much at all. We had indicated that we have three ways to capital allocation that we were pursuing, one is the issuance of a dividend which we have done $0.06 per share this quarter and the Board we'll continue to evaluate the appropriateness and the level of that as we go into the future. In addition to that we have in place a $250 million authorization through repurchase of shares. That program is active and implemented and we will provide you updates on a quarterly basis as to what progress we're making against that particular activity. Obviously in this report that we put out, it's at the end of the June quarter of which the shares were not really available until this current quarter that we're in, so just be aware that program is active and it's being worked as appropriately in accordance what we as a management and the Board determine to pursue. And further we believe that we still have capacity for some strategic acquisitions. We continue to look at that area. We are active. We don't have anything really to discuss today any further than that, but it is active and we're working on seeing some things that are consistent with our strategy to be able to pursue our existing and our adjacent markets. And again, our concentration is going to be in things that we know and we understand and that is our focus.

Terrific. Thank you very much.

Thank you, Bob. We have another question for you. This one is from the line of Chase Jacobson of William Blair. Please go ahead. Chase A. Jacobson - William Blair & Co. LLC: Hi. Good morning. Peyton S. Baker - President, Chief Executive Officer & Director: Good Morning Chase.

Hi Chase. Chase A. Jacobson - William Blair & Co. LLC: So margin in nuclear operations clearly it continues to outperform the expectations of high teens. I guess with respect to that if you can just talk about the sustainability of that and kind of tie in any update on the contract negotiations for the next phase of that contract and also how the mechanics transition from the current contract to the next work. Did you stop the work on the existing one and you moved directly to the next one or is there a period where there is work on both contracts? Peyton S. Baker - President, Chief Executive Officer & Director: Yes, Chase this is Sandy. I'll try to answer that for you. From the high margin perspective we would like to think that it's sustainable, but it's hard to predict that. Most of that margin improvement from the ASO (24:31) numbers is due to execution in the shop and the prediction of that is relatively hard to do. So we're holding our forecast for the rest of the year that will be in the high teens as compared to where we are today. So again predictability is a little difficult. We are just beginning the discussions on the next major contract with our customer. That will continue on probably for the next several months, looking for a conclusion of that in late October and in November that's when we'd like to see that. One contract does not end and another start. We're doing work on probably a hundred contracts to-date line items in contracts. We have four active large contracts that we booked back – starting in 2006 which didn't work on. So it's a continuation, it's an overlap, its multiple contracts introduction at the same time.

Yes, Chase, point two is when Sandy talks about predictability. It's more of that area of when we give guidance to say that we'll be somewhere in the high teens. It's that range between there and what we have seen in these recent quarters. We have the ability to being able to look at our backlog and complete our projections on the backlog and we have to stick by that. But that takes us into this other space and as Sandy has indicated, if we have excellent performance in our shops and we can aggressively manage our costs we can produce these other numbers and we're here towards that end. But the ability to predict that rationale on an ongoing basis is to say that we produced over 20 this quarter, we predicted 20 in the next quarter. It falls into that realm. So that's why we always indicate that we're somewhere in this high teens range because we feel that that's very reliable by itself. Chase A. Jacobson - William Blair & Co. LLC: Okay. Thank you. And then you've been talking about this missile tube opportunity for a bit. You mentioned $1.5 billion market opportunity over the next 15 to 20 years. Can you maybe just expand on that a little bit as to give us some idea of what BWXT's share of that could be and kind of when you think that it could become more meaningful to your business? Peyton S. Baker - President, Chief Executive Officer & Director: Well we have got. The first, the initial contract is booked and we're actively manufacturing today and that will be following up by subsequent contracts through the period that I described. It is about 1.5 million, it's 300 plus tubes it's for Ohio class replacement submarines, it's for Virginia class submarines. So it's a sizeable market. There are a couple of competitors to us right now. We expect that to be reduced to probably two in the future and we're glad to be one of them. So in looking at that again in a competitive environment going forward it's kind of hard to predict what you're going to see, but we've been very successful so far and I think that success is going to lead to a major position in the missile tube manufacturing contracts going forward. Chase A. Jacobson - William Blair & Co. LLC: Okay. And then just last one here. There was a pretty large transfer of cash to the power business this quarter. I think it was based on their performance. Can you just confirm that any transfers between the companies are kind of done at this point?

Yes everything is settled between us and the spin-off of Power Generation Group so they have their cash, we have our cash. So from here on out, going forward. Chase A. Jacobson - William Blair & Co. LLC: Perfect, thank you guys.

Thank you.

. We have another questions for you, it's from Tahira Afzal from KeyBanc. Please go ahead.

Hi folks and congrats on the strong quarter. Peyton S. Baker - President, Chief Executive Officer & Director: Thank you, Tahira.

I guess, my first question is really a follow-up to what Chase was asking. Do you assume high teens for the full year, you would have to see your margins drop off by let's say 300 basis points I believe sequentially. So would love to get a sense if you've looked at, you guys had a good idea of why execution is performing better than expected, but can you see a sort of sequential dips and fluctuations of that amount without any real contractual change that's really flowing through the numbers just on pure execution? Peyton S. Baker - President, Chief Executive Officer & Director: Yes, Tahira let me clarify a little bit. We really don't see a degradation of performance against that high-teens goal and expectation going forward. We really don't see us significantly decaying the rest of the year. We're just saying that we believe that's subsequent quarters going forward are going to be delivered in about that range based upon our contracts, our backlog and our predictions against those contracts. And so, that's the view that we have on that so we're really not looking at deteriorating at this point. We're looking at maintaining our performance at that level and again we'll continue to work on opportunities that we might be available to deliver more.

Got it, okay. And in your prepared commentary you talked a bit. You mentioned about new some more opportunities with shipyard for Nuclear. I would love to get a better idea of some more color on what type of opportunities those could be? Peyton S. Baker - President, Chief Executive Officer & Director: Yes, Tahira, this is Sandy. As a result of the missile tube contract that we have and the job we're doing there we're seeing opportunities, other opportunities manifest themselves for manufacturing hardware at least one of the shipyards. So it's metal manufacturing much like we do in our high-consequence operations. So we'll be – we're actively responding to RFPs for that kind of work. We're also looking at our medical target business particularly in Europe and Australia. There are opportunities there. We have manufactured medical targets with the past domestically and we see an opportunity internationally to gain some ground in that arena. Also in our research and test reactor business, there are opportunities internationally again particularly in Australia, and Europe and we are actively providing proposals for work in that arena.

Got it. Okay and before the spend if I rewind back a year or two, I've always thought of that part of the business in what is now BWXT as sort of more plodding along what it is doing to a greater degree. Has the spin off or the lead into the spin off actually sort of rejuvenated your workforce and yourselves to really explore these opportunities, or have they always been on the map. And I suspect now we are starting to see more action on them?

I think it's probably a combination. I mean certainly when you – one of the major thrusts in doing this was to concentrate the focus of management, focus on capital and I believe that we're seeing that in both sides of the business. A lot of the initiatives and things just didn't fall out of the sky in the last 30 days. These are things that have been on the table. We've been working on them. There has been a lot of energy towards them. And so I attribute the ideas and the initiatives as the way that we would run a consolidated company, but there is no question that when you narrow the focus down it has an impact and that was always part of the plan of management and the Board when we announced that we recommended pursuing this spin.

Got it. Peyton S. Baker - President, Chief Executive Officer & Director: I believe it's a combination of both.

Okay. Last question is more on the technical services side. It's interesting you've made some strides with NASA. I would love to get a little more color on what you can do there and as you've gone through and established that relationship what else your can do for them. And given that you have a lot of experience with liquid fuels et cetera, I would love to get a sense if you can actually really take your expertise and take it up into the commercial space ventures out there? Peyton S. Baker - President, Chief Executive Officer & Director: Yes, Tahira I think you're exactly right. I mean the expertise, our people, our background in that business is great. And looking at the forecast, looking at what's coming down the pipe, there are lots of opportunities inside the federal services business that we have – for us to garner a bigger role. Certainly looking at the commercial side there are opportunities. I think the step into the NASA side of the business with (34:57) is a stepping stone for a larger piece of the pie there and there are opportunities on the DoD side that we certainly are equipped to do and perform and we would be looking at those as well. So lots of opportunities for us in that arena.

Thank you very much, folks and congrats again. Peyton S. Baker - President, Chief Executive Officer & Director: Thank you, Tahira.

Thanks, Tahira.

Thank you. We have a further question for you. This one is from the line of Rob Norfleet at Alembic Global Advisors. Please go ahead, Rob.

Hi, good morning, guys. This is actually Nick Chen for Rob Norfleet this morning. Thank you so much for taking our questions. Peyton S. Baker - President, Chief Executive Officer & Director: Hi, Nick.

Great. So, just quick update on mPower would be useful. We know the reduced CapEx is going to be in the $15 million range. Are there any other updates there in terms of finding a partner for the program or maybe selling down some of the ownership? And on top of that, are there any ways to get the spend down further from current levels in 2016?

Yes, I have just a few views on that. We really believe that there has been an adverse change in the market associated with where we were going with this technology. We developed a great reactor. Technically we did a fabulous job. I think we had something that was robust and competitive, but with a combination of reduced power demand combined with a very low natural gas prices tremendous fracking just maybe one of the most disruptive technologies that's happened in my professional carrier and it certainly has had a major impact in this particular area. But with that it hasn't diminished our interest in being able to capitalize on the investment that we've made. We still have a few vehicles and angles that we're pursuing on that. We haven't exhausted all the possibilities. We are continuing to provide a certain level of funding associated with that. I believe that if things stay the way that they are today, I see us really not exceeding or potentially even slightly reducing the amount of funded that we provided going forward. Obviously we're not going to continue to invest in something that has no strong outlook going forward. But we haven't exhausted all the possibilities. We are still making some smaller – albeit smaller investment to technology and we're still pursuing some alternatives there. In addition to that as we've seen in the quarter we're not limited to that. We certainly have made some entrées into places like Asia with commercial and nuclear technology. We are working on albeit at a very small level some other alternative reactor technology for other partners, so it's like capability there that we believe is important, that we would really like to maintain, but we're trying to be very prudent in management of our investments in light of where the market has made itself apparent to the world and everyone.

Sure, that's really helpful. And then finally just in terms of the Nimitz Class carriers is funding still intact for that program and should we expect any sort of contribution in 2016 from it? Peyton S. Baker - President, Chief Executive Officer & Director: The Nimitz Class as far as our business is concerned is mostly on the refuel side, so that major overhauls that are done in the shipyard we have just booked another refill for the Nimitz Class and I think there is one more to go in the next packet. So in that we'll complete all the redrills for the Nimitz. The Ford class is the due class and we are building and have delivered the reactors for the first ship and are working on the second.

That's really helpful. Thank so much guys and congratulations again on a strong quarter. Peyton S. Baker - President, Chief Executive Officer & Director: Thank you.

Thank you, Rob (39:17). There is no further questions. I will now hand the call back to Alan Nethery for closing remarks. Please go ahead. Alan Nethery - Vice President, Investor Relations & Corporate Procurement, BWX Technologies, Inc: Yes. Thank you for joining us this morning. That concludes our conference call. A replay of the call will be posted on our website later today. It will be available for a limited time. If you have further questions please reach out to me at 980-365-4300. Thanks. Have a great day.

Thank you ladies and gentlemen that concludes your conference. You may now disconnect. Have a good day.