Ladies and gentlemen, thank you for standing by, and welcome to BWX Technologies, Incorporated Second Quarter Earnings Conference Call. At this time, all participants are in listen-only mode, following the company's prepared remarks, we will conduct a question-and-answer session and instructions will be given at that time. I would now like to turn the call over to your host, Mr. Mark Kratz, BWXT's Director of Investor relations. Please go ahead.

Thank you, Ben, and good morning, everyone. Welcome to BWXT's second quarter 2019 earnings call. Joining me today are Rex Geveden, president and CEO; and David Black, Senior Vice President and Chief Financial Officer. On today's call, we will discuss certain matters that constitute forward-looking statements that involve risks and uncertainties, including those described in the safe harbor provisions found in yesterday's earnings release and our SEC filings. We will also provide non-GAAP financial measures, which are reconciled to GAAP measures in our quarterly materials. Copies of these documents, along with a replay of today's call, are available on the Investors section of our website. And with that, I'll turn the call over to Rex.

Thank you, Mark, and good morning, everyone. Yesterday, we reported second quarter results with solid revenue and earnings per share growth of 7%. This reinforces our proven ability to deliver good business results on operational excellence as we execute against our robust backlog and look to future growth through a number of strategic initiatives, with about 55% of our earnings for 2019 is still anticipated in the second half, we continue to focus on strategic priorities and operational execution to deliver the balance of the year and position the company for continued growth in future years. I will now provide a brief business update before handing the call over to David. In the Nuclear Operations Group, we are driving higher shop volumes across all platforms including the New Columbia class submarine, and saw those efforts bear fruit in the second quarter through increased production tempo and the acceleration of some long-lead material. We continue to aggressively hire qualified personnel for the multi-year production ramp and are making very good progress towards those goals. We anticipate this growth trend to continue through the year Driving increased second half earnings through higher volume and materials as we exit 2019. The NOG segment is also making progress on contract proposals for the accelerated Ford Class Carrier and a separate order for long lead materials. We anticipate wrapping up those negotiations in the second half of the year, which will provide additional visibility and backlog for the nuclear propulsion franchise platform. The team is also performing well on missile tube repairs, we have completed all repairs on the Virginia payload module tubes and are about halfway through the total welding rework campaign, missile tube repair costs remain on track and we expect to complete the bulk of the repairs this year, with the remainder…

Thanks, Rex. Starting with segment results. Nuclear Operations Group generated record revenue for the second quarter of $358 million, up 7.9% year-over-year, driven by higher production volume and the acceleration of long-lead material purchases. Operating income for the quarter was $75 million, up 12%, due to higher volume and the absence of missile tube charges we incurred in the second quarter of 2018. The Nuclear Power Group produced $87 million of revenue in the second quarter, a 14% increase when compared to the second quarter last year, driven by an increase in refurbishment component work in the medical radioisotopes acquisition. Partially offset by the anticipated lower volume in recurring field service activity. Second quarter segment operating income nearly doubled versus the prior year period, to $14.9 million, driven by higher volume in the commercial power business including contract improvements as well as the medical radioisotopes acquisition. Second quarter NPG operating margins were robust at 17.2%. And lastly the Nuclear Services Group contributed operating income of $1.8 million in the second quarter, down about $1.7 million versus the second quarter of 2018. Improved site performance was more than offset by higher bid and proposal activity and contract completions in 2018. Moving now to total company results, as Rex mentioned second quarter EPS was $0.62, up 7% from the second quarter last year. Higher segment volume, solid operating margins and lower share count were partially offset by higher interest expense and lower pension income. The company's second quarter capital expenditures were $31 million, bringing the year-to-date CapEx to $76 million, up 123% versus the halfway point of 2018. We also continue to return capital to shareholders in the second quarter through $16 million in dividend payments. This brings total year-to-date capital return to shareholders to $53 million, inclusive of $20 million in…

Thank you. We will now begin the question-and-answer session. At this moment we will pause briefly to assemble our roster. [Operator Instructions] Our first question comes from Bob Labick with CJS Securities. Please go ahead, sir.

Hi, good morning, it's Pete Lucas for Bob, I think you touched on. I think you guys touched on it, but how does the NOG pull-forward impact the cadence of earnings in 2H, was it more from Q3 or Q4? And also the Columbia Class -- it sounds like everything is proceeding on schedule there. Just wanted to touch on the cadence of that for 2020.

Yes Peter, I'll take that. We kind of expect a sequential buildup of earnings from the first half and into the second half. Q4 being heavily, more heavily weighted in Q3 is the way we see that going. In terms of the Colombia production, we're doing very well with it, you can see that in our Q2 results. That was one of our three strategic priorities for the year, to ramp successfully on the new Columbia product line. And we've been able to hire successfully. We've been able to get that product line up and going, so we are quite optimistic about it.

Great, thanks and a jump into the Nuclear Services Group, the bids you spoke about where these new opportunities and when will you know the outcome of those?

Yes, there are two new opportunities at the Hanford site deal -- opportunities related to clean up out there. One is called the Central Plateau Cleanup Contract and the other one is a waste tank Remediation contract. We -- both of those-- one of those likely be awarded this year and the other one likely into next year, and we're competing on both of those.

And last one for me -- on Nuclear Power Group. Can you expand on the contract adjustments in the quarter and just briefly touch on the quarter there?

The contract adjustments or just normal adjustments and improvements in contracting. One of those would have been the China steam generator projects that would have helped the quarter quite a bit. Once again that is complete and will not be in our future. So, but those are normal finishing up the contracts and taking adjustments or improvements for those.

Great, thank you very much. I'll jump back in the queue.

Our next question comes from Pete Skibitski with Alembic Global. Please go ahead.

Nice quarter guys.

Pete, thank you.

Just to drill down more on NOG in the second quarter. So was Colombia the biggest driver to growth? And I'm just wondering at what point you guys are starting to ramp on Virginia Block V as well, and will both of those programs’ kind of ramp further in the second half and into 2020 and just in terms of tailwind for NOG?

Yes, Pete. I wouldn't say the biggest contributor was Colombia, it's certainly a significant contributor, but we've got, we have high tempo production for all three major product lines right now, so Ford is going, Virginia's going, Colombia is going, we're working because of the volume and because of the demand signal we have mandatory overtime going at all of our plants, all five of our North American NR dedicated plants. We've added some shift work in order to meet that demand, and of course as you well know we're capitalizing for additional growth in the future. So sort of an existential operational challenge for us is to deliver good results on the existing product lines, and to build out the factories in the meantime for additional production. So I think we're kind of walking that tight-rope really well right now and we expect that momentum to carry us into 2020.

Okay. So you're at the early, early stages of all three of those programs, it sounds like?

No. We're in the early stages on Colombia, we're just mid-stride on Virginia and Ford.

Okay. Last one from me, Rex, how many isotope programs, are you going to have post these next two? When they come online and then are there more on the hopper ex Moly?

Yes, there are. Pete, we had with the business that we bought -- the former Nordion business which is headquartered in Canada and has a significant cyclotron operations in Vancouver had five existing product lines, TheraSphere is one of the large ones. We have a nice product line in strontium and three others, and so when we bring the Indium-oxine online along with the Gallium-Germanium product, that will be seven total product lines. Moly would make eight product lines. And we're also working towards -- we have R&D activities on future therapeutic drugs like Lutetium 177 and Actinium 225. Along with an Iodine-123 that we're working on that comes out and probably a couple of years. So I mean you can see a product portfolio of 10-11 products in the next half dozen years.

Okay, that's great. That would seem like this was going to be a higher margin unit that the balance of NPG. Is that-- would you agree with that?

Yes, it's generally -- it's a higher margin business than any of our business, as you know, we have, I mean you sort of value-shop construction across most of our business and we have gross margins that run, let's call it in the low '30s typically across those three business units -- the historical business units. This is a more of a commercial value chain kind of business with product development characteristics to it and so gross margins tend to run in the, let's call it is certainly north of 50% maybe mid-50s contribution margins higher than that obviously, so incremental revenues make a real difference in that business.

That's great, thanks for all the color, guys.

Thank you.

Our next question comes from David Strauss with Barclays. Please go ahead.

Hey, good morning, guys. -- on for David. I wanted to ask, why -- nuclear power, are you able to break out what sort of organic growth would have been ex Nordion in the quarter?

We actually have reported that separately. Historically, the thing I would say is that we have said, when we acquired the Nordion business that you can think of that as a $40 million or $50 million business and so you can, you can sort of get the run rate from it, but we're not reporting it separately.

Got it, okay. And then I guess one other one on nuclear power, sort of, I think your guidance implies margins drop-off in the second half. Is there anything driving that or is that maybe the China steam generator stuff coming off?

Yes, once again we had some contract adjustments here for some closed contracts including the China steam generator project. So right now, we are forecasting the year to come in around 14%.

Okay, thank you.

Our next question comes from Ronald [ph] with Bank of America Merrill Lynch.

Rex, good morning. Can you provide an update regarding the FDA approval process for Moly-99?

Sure. There is no change in that. We expect to be submitting reference batches in the summer of 2020, and then there is a timeline for approval by the FDA that we anticipate to be seven or eight months and linked, something like that for an accelerated approval, which is a path that we believe that we're on. We have had a number of preliminary meetings with the FDA and we'll continue to have those as we move along, but the important milestone is to submit a reference batch which is basically material that has been produced on the production equipment in the factory and then take that through FDA approval and that's the key milestone for production.

That's helpful and maybe switching gears to the Navy. When we look at the increasing Navy build. We're seeing some manufacturers struggle with absorbing less trained workers particularly in welding, and that's been resulting in rework and higher costs. Can you discuss where you are with your labor requirements and training plans that you have in place so that you could prevent quality issues, especially as we ramp up in volume for US Navy work?

Sure, there's a couple of things I would say about that. One is, we certainly are ramping pretty aggressively right now. We extended over and had accepted over 100 offers in the last quarter. We're finding very highly qualified people, but we do have robust training programs and we take people through, sort of, in addition to sort of the classroom training that you have to go through for criticality safety and things of that nature, but we take them through pretty long on-the-job training program. So that when they are released into production work, the risk of defects is -- the risk of production problems is we hope relatively low. I would also say that in the case of the Columbia program, I would say it is incrementally different from Virginia and Ford, not dramatically different from Virginia and Ford in terms of the kind of technologies and materials that we use there. So there is a familiarity to it and I think therefore limited amount of risk to stumbling on that product line. So we're watching it very vigilantly and believe that we're on track to do well with it.

Thank you.

You're welcome.

Our next question comes from Robert Spingarn with Credit Suisse. Please go ahead.

Hey, good morning. I mean, first of all and nuclear operations. Just the I guess the margin falls off in the back half, just due to the lower volumes, because of the acceleration in Q2, is that why drops below 20%?

Your question is on NOG, Rob?

NOG.

And once again, I think for NOG We say that the high teens are going to be the margins. Except for the fact that you do have some pension reimbursements still for next couple of years that will take you 200 to 300 basis points higher. So we haven't claimed a specific percentage in the future, except for that.

Okay. So if, all right. We'll take that offline. Rex, you talked about your progress and remediating the missile tube issues, but you made a remark there about not receiving incremental orders for additional tubes yet, so I wanted to ask what your discussions are like with customers. Is there a pathway to stay in the business or the exit?

Yes, I think Rob there is I think there is a pathway to stay in the business if we want to do it, we certainly as we've said on two or three calls now, we'd want favorable terms, so that we could be profitable and it could be an interesting product line for us. The tone of discussions is cooperative and favorable. I believe that the ultimate client, the Navy and UFC would like to have more than one domestic supplier at least on the common missile compartment tubes, and so we continue to have productive discussions and we'll see how it comes out.

Okay. And then just looking longer term from a CapEx perspective, you've talked about the 3% to 3.5% of NOG sales. But I wanted to get an idea, again on the timing of reaching that given the ramp in the Columbia into the 2020s and then just overall what your CapEx looks like long term when we factor that together with what you've been doing in the medical business.

The 3% to 3.5% is overall for the company is what we're saying is our normal CapEx once we get through this period of time of growth CapEx this year, we say $225 million is the amount of capital. Inside of that capital is about $50 million for the medical radioisotopes business. We feel that there is about $100 million more to throw on top of that. We look at this year and next year to be the two high capital years and then when we get into '21, by the end of the year, you're going to be at that 3% in the second half of the year -- 3% to 3.5%. So you've got this year, next year and then you're going to start coming down, but as far as medical radioisotopes go, we feel $50 million this year and is about $100 million next year.

So '22 is your first…

Two or three years for the first $100, yes.

Got it. So, but you've got something in each of these years. It's the back half of '21 that normalizes?

Yes, back half of '21 that normalizes.

Got it. Thank you.

Our next question comes from Peter Arment with Baird. Please go ahead.

Thanks, good morning. Rex. David. Hey Rex, you mentioned the 50% on the missile tubes that you've completed. But you don't finish until it sounds like -- early 2021. Just could you walk us through that process of just the timeline where you expect to be, I guess at the end of this year.

Yes. Peter, good morning. Right. So there is a couple of repairs that bleed over into 2020. So the vast majority of the missile tube repair work is done this year we're all but done by the end of this year on the missile tube repairs. We believe the 2021 reference was to the normal delivery schedule that we have for the rest of those tubes. We still have a number of missile tubes to deliver, some of which weren't even started when this missile tube welding problem occurred, so that's the story there. Repairing through this year continuing with normal production through this year and then delivering missile tubes all the way into 2021.

And then just as a quick follow-up on the NOG growth this quarter, was the just the long lead items that pulled into this quarter, was that just unexpected or it's just a timing thing just trying to get some clarification there. Thanks.

No, it was not unexpected, Peter. What -- we put some pretty good steam into Q2 because we really want to try to de-risk the second half. And so, as I mentioned a bit earlier in one of the other questions. We have some mandatory overtime running at a pretty high level. We added some shift work we did pull long lead materials where we could, and so we put our shoulder into it to deliver that kind of a result and we'll keep up that tempo through the year, but it was really more about trying to de-risk the second half.

Okay. And just lastly on, you mentioned, if you don't do any more missile tube work, you'll be reallocating that capacity. Maybe you could just walk us through a little bit of that -- you have the work obviously to absorb.

We do so the large components in our Navy program are made it two primary plants. Those are Barbara in Ohio and Mount Vernon Indiana, very large components there and we've got more work than we have capacity right now. So that -- there is a building that we called 219 that was refurbished. It was a building that was built decades ago that we refurbished for the missile tubes. It has large machine tools cribs, various kinds of welding equipment, various kinds of things that are common to both programs. And with the pivot to naval reactors work -- large component work in that facility. Should that occur and it will offset the CapEx needs that we have for the overall Navy growth by somewhere in the tune of maybe about $10 million. And so there is some savings to be had there if we pivot towards in our NR work.

Appreciate it. Nice quarter.

Our next question comes from Michael [ph] with SunTrust. Please go ahead.

Hey, good morning guys. Thanks for taking the questions. Nice quarter. Right, just to stay on the to the missile tubes. Would there be any charges or costs, I mean based on what you just said, it sounds like you can pretty seamlessly pivot without incurring any sort of shut down costs. If you decide to exit the market.

Yes, Michael. We believe there is very low risk of stranded capital in any case, it's immaterial. So most of that equipment is it's, I don't want to say, garden variety, but it's the kind of equipment that you use for large components such as missile tubes, reactor vessel closure heads, those kinds of things. So it's a pretty easy translation.

Okay. And then just on the recent award. I mean BAE got the cut the contract produce 28 tubes. Can you just give us the background around that award? I mean it sounds like if you guys are going to participate in this market and we want to make sure your returns and margins are there. So anything that we should read into that recent award from BAE on your future?

So you know the BAE award is for the Virginia payload modules and so it looks like they've got the lion's share of that. I think we've always thought our future with more around the common missile compartment. We've historically one at least about half of those orders. And so that's really where our opportunity lies in the future I believe.

But you are correct in stating the fact that we're not interested in the future orders unless we do have a way to make money on these orders.

Got it. And then maybe gave it just one more housekeeping on the -- we talked about the margins here -- was the margin increase a sole function of those contract improvements? And can you quantify what they were in the quarter?

I don't think we don't think we've quantified those separately. I will say that margin, a very robust margin which is going to be a high hurdle for next year. Q2 was primarily driven by contract improvements in the China steam generator project. A few other things there too, but that China steam generator project, which we've been doing for about 3 years is right on the verge of wrapping up. It has put a lot of income on the bottom line. So that will go out of the business and we'll have to find ways try to maintain margins in the future, but most of it was that. But we also have some Nordion in there because you the new acquisition and that, as Rex has mentioned, what that business in the gross margins are in that business that also helps. So it's a mix of the two.

Got it. And then just the last one from me. On the FDA update, and I know you said there was no real update but you kind of set of 7 to 8-month process, where you are on this accelerated path you believe you on that, is the timeline pretty tight to get to that commercialization in the '21 time period? Is there, room for any slippage if you're it turns out, you are not on that accelerated time passed for 1Q 2021?

There's a little bit of guesswork around the regulatory timeline. If you look at the history of these accelerated approval that kind of range anywhere from about 2 months to maybe 9 months, and so maybe we'll get lucky and get an earlier approval. There might be a little bit of cushion there, but in terms of the rest of it, we have three primary kind of activities that are going towards the industrialization of the Moly product line. One is this target delivery system that we put on the reactor to move the Moly through the CANDU reactor to accept the neutrons, that's on track. And then the other two components will go into our near Ottawa, Canada, and those are the radio-chem line, which is to process, the material after it's been irradiated. That involves modification of hot cells and installation of some equipment. As we said in the call here, we've got the full scale pilot plant running in Lynchburg right now, which is an identical version of the equipment that will be, there will be put into Ottawa. And it's running well, by the way, it's a cold, it's a cold chemistry, process, it's not irradiated material but it's identical. And then the final thing is the radiopharmaceutical line, which is the line that we used to place the material into these generators, we've got contracts out on all the major pieces. For example, the hot cell modifications and some other things. And then we're doing plant modifications up in Ottawa. So I would say, Michael. There is a lot to do, we've got to knock down a lot of walls and install a lot of equipment, and our vendors have to deliver on time. So I worry about it. I'm personally doing quarterly schedule reviews -- detailed schedule reviews and obviously the leaders of that project are looking at it every day. So keeping our eye on it. I think there is some risk in it, but so far so good. We're on track.

And is that transition, once you get the green light to production. I know you've said, you've got the full scale pilot, do you think that can be -- can you kind of flip that switch pretty quickly to get onto full rate production?

I think so we're planning to do at the way we have it planned at least kind of the way we model it financially; is we're expecting to sort of crawl before we walk and walk before we run. So we will be doing a limited amount of production in the early stages. And then, let's call it sort of ramping up to full production capability over a period of months. I certainly don't think we'll hit the main or the main breaker and certainly we're producing half of the global demand or anything like that.

Got it, that makes sense. Thanks a lot guys.

Thank you, Mike.

Our next question comes from Carter Copeland with Melius Research. Please go ahead.

Good morning, thanks for taking the time. Just a quick question, Rex on the mix of business at NOG. I mean the comments earlier on early stages on Colombia, you seem like you're coming up the curve nicely on there, and you sort of highlighted mid stride on Virginia and Ford. I just wondered as you look forward, the remainder of the year ended 2021, you just look at the general sort of risk retirement opportunity at NOG. And if there is any kind of evolving change there as you transition a little bit? Any color there would be helpful.

Okay. So maybe I'll offer a little detail Carter, before I get to you the heart of your question. So when you think about what's going on in our shops and we articulate this in our Investor Briefing, as we've said before that the delivery schedule for a typical Virginia is six years, give or take and ordering two of those per year. So think of about 12 different ships going through our factories at various stages of completion at any one point in time. Some of the new orders and some of them on the verge of delivery, and we have a single Colombia going through right now. So that will give you some sense of sort of the volume comparison and then for the Ford, the Navy orders to orders a Ford aircraft carrier nuclear propulsion system every five years. There to be two of those systems on each carrier. And those take about eight years to deliver. So think of anywhere between two and four different Ford ships that's going to the factory one point in time. So Colombia is not a dominant feature of the production right now it's a critical feature because we're ramping up on it, but it's just a single shipset compared to those 12 Virginias and let's call it those-- let's call it, those four Fords. In terms of any risk -- that's the stuff that we're kind of knocking down day by day. We've got to learn how to process that material and do it at high tempo as we go through it, but I think as I opined earlier, we are doing that and our Q2 results speak to that, so we're not hitting any stumbles in the Columbia line at this point in time.

Okay, thanks for the color. And just as a quick follow-up on NSG -- the slippage versus complete removal of some of the opportunities you envision there, any color you can give us on that?

Yes, so our missed opportunities are in primarily in what we call our any NE -- Nuclear Energy US services business -- where and one case, as David said in the script, the Three Mile Island plant was shut down, we had a service outage scheduled for the second half for that. We had another opportunity that was a swing and a miss in that business. These aren't large but they tend to be significant in the scale of the NSG operating income. And then that we have a bit of a bit of income in our plan related to the Hanford opportunities in the second half, not large but it is a feature of our second-half and one of those two Hanford opportunities, the award timing, we believe is going to move into next year and so that puts a little more risk in NSG in the second half and that's the reason we dialed back the guidance on it. We're still in play for both of those, and we're optimistic that we could win certainly at least one of those, we have that optimism but that's the way we characterize that aspect of it.

Great, thanks for the color, guys.

Thanks, Carter.

Our next question is from Josh Sullivan with Seaport Global. Please go ahead.

Good morning. Rex and David, nice quarter here. Just a question on the isotope market. Can you talk about the current pricing dynamics in the TC-99 market and maybe just how you see that evolving as you and Shine enter the market and I guess, do you think that the older supply chain becomes obsolete supporting that market as you guys entered the market?

Yes. So it's an interesting question, Josh, I mean, you really got two players there -- Curium and Lantheus are supplying North America right now and they are supplying those from research reactors in Europe and in other places. As you know, those reactors are old, those research reactors are typically about 50 years old and there are supply discontinuities that result from unplanned outages and regulatory issues and all of that, you can see that wreaking a little bit of havoc in the current market. So I think our entry to the market creates a continuity of supply feature that will be quite attractive to radio-pharmacies and we're kind of betting on that outcome. As to the other entrants, the other potential players, I think it depends on the kind of timelines they could achieve. Our plan is to get to market as quickly as possible and to reach higher production tempo fairly early and we'll see what effect it has on the competitors.

Got it. And then just one with regard to the CANDU reactors. Are there opportunities outside of Canada, I mean, are there international CANDU reactors that you guys might be able to address as well over time?

Yes, there are few. I mean there's one in Romania in Cernavoda, there's one in Argentina, and there are couple in South Korea, a couple in China. There are some CANDU-like reactors kind of knock-offs that are in India. So, yes, that's right, so you can think about a global footprint with CANDU irradiation services capability and it's an interesting thing and we kind of have our eye on that.

Any idea of timing or anything with those reactors are they coming near, or is that more longer-term?

I think it's a longer term. Josh, we want to attack this North American market, which is probably half the global market -- really concentrate our resources there get stable there and then we can think about expansion of our footprint.

Got it. And then just one last one on UAVs the direction the Navy taking is programs such as the Orca, are there any plans to have any of those systems, nuclear-powered or any portion of the power supply chain to be nuclear-powered, just trying to get an idea of how BWXT might fit into the drone ecosystem as things evolve?

Yes. So I haven't heard of any plans to nuclearize those kind of platforms. Josh, I think it's certainly conceivable possibility, we are -- as I have said a couple of times working on a class of very compact, high temperature gas reactors. We're calling those Micro Reactors. We are concentrating on space and national security applications right now such as taking forward bases off the grid or providing surface power for space exploration or to power directed energy weapons -- there are a lot of very interesting applications of compact reactors. And so you can conceive of that application, but I don't know if any Navy plans to do that yet. I do think you can imagine nuclear applications across a variety of national security problems though and I'm quite bullish on it.

I appreciate the time. Thank you.

Our next question comes from Tate Sullivan with Maxim Group. Please go ahead.

Hi, thank you very much. A couple of follow-ups for me, and you've covered a lot of it and thanks for the Moly-99 and other isotope product conversations too. Rex, I was surprised you mentioned that you're working on a single Colombia now -- then what is the higher cadence of work related to just dedicating more employees to that specific job?

Well, there is that. Yes. And plus there is the two Virginia tempo that we're in that we a few years ago, we were not in. So it's the whole Navy 355 ship building plan. So there is the two Virginias, there is the introduction of the Columbia and then there is the acceleration of the Ford onto a four-year order cadence, at least for this next one and possibly into the future, so it's all of that combined, Tate.

I see -- I'll add a follow-up. But I mean as I see just the shipyard ordering plan -- the next Columbia's 2024 and with a six-year timeline does it depend on the nextNavy budget round to start working on that Colombia, or can you give any potential timeline on that?

Yes, so as you will know the long lead items for those Colombia ships are of the nuclear equipment, is ordered two years in advance of when the ship is ordered. So when you look at the Navy shipbuilding schedule, that's the whole delivery schedule is a way to think about that, that's when the shipyards begin their work. We start two years prior to that. So the reasons we're working on Colombia now -- the first one is because the first Columbia boat is ordered in 2021, and so that the ship that you see in 2024 gets ordered from us in 2022 and so on. So just subtract 24 months from the shipbuilding schedule to see when the reactor equipment is ordered. Of course, yes, as always in all of our programs of this nature it depends on congressional authorization appropriation.

Thank you. And last follow-up for me. And sorry to keep you. Was it two or three years ago, you also have another China boiler order that helped margins in the quarter? Are there any replacement orders for that or is the tempo every two or three years or should I not look at it that way?

There is maybe some probability of follow-on orders, the Chinese company that we're selling those steam generators to is proposing work in the UK, for example. So it's possible that there are things out there in the future that would use our steam generator, but it's not a thing that we're counting or a planning for at this point. So you can think of that on as going out of the portfolio.

Okay, thank you very much.

Operator, we'll take our last question.

Okay. Our last question comes from Pete Skibitski with Alembic Global. Please go ahead.

Yes, Rex, just one follow-up on Nordion. And this may be too simplistic, but just going from five product lines to seven, just excluding Moly, that's a 40% increase in product lines, is it reasonable to think that Nordion again ex Moly, can grow double-digits the next couple of years, just on the back of the new products ramping?

Yes Pete, of course, all of those product lines, don't have the same kind of volumes. And so the math I would offer is that it depends on the market uptake here, but I think these two product lines conservatively could add incremental revenues in the 15% to 20% range. I can certainly see it going above that depending on how well the market responds to it, but there is certainly existential demand for these products and we'll see some growth.

Okay, great. Thank you.

Thanks Pete.

This concludes our question-and-answer session. I would like to turn the conference back over to Mark Kratz for any closing remarks.

Thanks. Thank you for joining us this morning. This concludes our second quarter 2019 conference call. If you have further questions, please call me at (980) 365-4300 Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.