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@StableBread

Fajasy on X

How did a boiler maker founded in 1867 become the Navy’s reactor supplier? BWX Technologies’ $BWXT history runs through two spin-offs and a decade of acquisitions: → 1867: George Babcock and Stephen Wilcox found Babcock & Wilcox (B&W) to make steam boilers. → 1953-1955: B&W builds components for the USS Nautilus, the first nuclear-powered submarine. → 1978: J. Ray McDermott, an offshore engineering firm, buys B&W. → 2008: B&W buys Nuclear Fuel Services, the Erwin, Tennessee plant behind the Navy’s fuel. → 2010: B&W spins off from McDermott as a standalone public company. → 2015: B&W spins off its boiler business as Babcock & Wilcox Enterprises $BW and renames itself BWX Technologies, keeping the naval and other nuclear businesses. → 2016-2020: Buys GE Hitachi Nuclear Energy Canada (fuel for CANDU, Canada’s heavy-water reactor design, 2016), Nordion’s medical isotope business (2018), and nuclear parts maker Laker Energy (2020), building out the Canadian commercial business. → 2022: Wins Project Pele, the Pentagon’s prototype transportable microreactor. → 2025: Buys the Aerojet Ordnance Tennessee (A.O.T.) unit of L3Harris $LHX for ~$100M in January and closes the Kinectrics deal (a Toronto-based nuclear engineering and testing firm, ~US$525M including assumed liabilities) in May. → 2026: Closes its purchase of Precision Components Group (PCG), a U.S. maker of heat exchangers and other heavy components, for ~$200M on July 1. Most recently, on August 3, Nordic Capital, a private equity firm, agreed to buy just over 80% of $BWXT’s medical isotope business for $750M plus up to $50M more. $BWXT wasn’t looking to sell until Nordic reached out, CEO Rex Geveden said on the Q2 call the same day. CFO Mike Fitzgerald said on the same call that the medical business should bring in $130M of 2026 revenue, at a margin “modestly accretive” to the 13% $BWXT expects from its commercial segment. Nordic’s $750M for just over 80% implies ~$0.9B for 100%, or ~7x revenue. At a ~14% margin, that’s ~50x EBITDA, more than double the 22.5x EBITDA $BWXT trades at. So $BWXT is selling a small side business at a premium to focus on what it calls its core businesses, nuclear national security and nuclear power.
@StableBread

Fajasy on X

Nuclear should bring in $3.7B of the $3.8B of revenue BWX Technologies $BWXT expects in 2026. $BWXT builds nuclear reactors and their heavy components, manufactures nuclear fuel, then services reactors once they’re running. It reports two segments: → Government Operations (73% of 2025 segment revenue, $2,350.1M): Reactors and fuel for the Navy’s submarines and aircraft carriers, uranium processing for the government, microreactor programs, and stakes in the joint ventures running government nuclear sites (booked as equity income, not revenue). → Commercial Operations (27%, $853.1M): Steam generators (heat exchangers turning reactor heat into steam), reactor pressure vessels, fuel, and field services for power utilities, mostly in Ontario. Also Kinectrics (a Toronto-based nuclear engineering and testing firm acquired in 2025) and a medical isotope unit $BWXT is selling. Naval propulsion is the core, at “a little bit less than 1/2” of revenue, CEO Rex Geveden said at $BWXT’s Investor Day on September 29, 2026. Special materials (the government uranium business) makes up 15-20%, and commercial power ~30%. The U.S. government accounted for 68% of 2025 revenue, directly or through prime contractors, down from 76% in 2024 as the commercial side grew. Four large utilities accounted for another 17%, per the FY2025 10-K. What keeps the Navy from switching suppliers is licensing. Only two plants in the U.S. hold Nuclear Regulatory Commission (NRC) licenses to produce fuel from high-enriched uranium (HEU, enriched to 20% or more, which is what naval reactors run on). Both belong to $BWXT (Nuclear Fuel Services in Erwin, Tennessee, and its Lynchburg plant), and the 10-K calls Nuclear Fuel Services “the sole provider of nuclear fuel for the U.S. Navy.”
@convequity

Convequity on X

Private equity puts a floor under software valuations, and you can work out that floor with simple arithmetic. A private equity buyer takes the company private, removes unnecessary staff, lifts margins to 30%+ and keeps growth in the low teens. A company restructured that way should be worth at least 20x EV/EBIT. At a 33% EBIT margin, 20x EV/EBIT is about 6.7x EV/Sales. That gives a simple test for any software stock. If it trades well below that level, the market values the business at less than a buyer could get from it just by cutting costs. In our view, the market sees no differentiated future for that company. So why don't more of these companies get restructured? One reason is ownership. Dual-class share structures are common across large-cap and mid-cap tech, and they limit how much pressure private equity and activist investors can apply. That makes it hard for a company like $OKTA to accept legacy status and carry out a deep restructuring. We expect many SaaS companies to keep fighting slowing revenue with high operating expenses rather than restructure.
@convequity 1 click

Convequity on X

$NVDA vs $AVGO: The Optical Edge NVIDIA can keep growing while facing pressure from more directions. Custom chips, optical supply constraints and specialized inference systems give customers more reasons to consider alternatives. Broadcom’s optical capabilities could help it win the accompanying compute order. Customers need both accelerators and the optical components that connect them to bring capacity online. Securing those components alongside an ASIC purchase could shift the customer’s platform choice toward AVGO. Control across lasers, photonic and electronic chips, and packaging also gives Broadcom more freedom to optimize the complete design. Embedded lasers could reduce the laser power required, easing dependence on scarce, high-power external lasers, although replacement becomes harder. For AVGO, this remains a potential design route. NVIDIA can respond through partnerships, but separate suppliers still have their own margins and product priorities. Google ($GOOGL) and Amazon ($AMZN) are expanding the alternatives through TPUs and Trainium. Our ABBX model allocates 10GW of Anthropic’s 13.8GW planned capacity to those two platforms. The plans span different timelines, but show how a few large buyers could redirect substantial spending away from GPUs. Huawei adds pressure through its integrated optical approach and the prospect of Chinese models supplying cheaper tokens internationally. That could affect both hardware choices and the prices compute providers can charge. Cerebras ($CBRS) targets workloads where faster responses matter. It can compete for latency-sensitive decoding without replacing GPUs across every stage of inference. NVIDIA’s defenses remain substantial. GPU batching supports high total output, flexibility across workloads matters, and its ecosystem is deeply established. Customers can use GPUs for prefill and specialized chips for decoding. Wider enterprise model development would also favor NVIDIA because smaller buyers have less reason to fund custom-chip programmes. At comparable valuations, we prefer adding to AVGO: it can benefit from custom-silicon adoption while helping customers secure the optics needed to deploy it. For NVIDIA, the key question is how much market share and pricing power it retains as customers gain more alternatives.

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