Moody's shifts BWX outlook to negative

Moody's Investors Service said it changed the outlook for BWX Technologies, Inc. (BWXT) to negative from stable and affirmed its ratings, including its Ba3 senior unsecured notes ratings. Moody's also downgraded BWXT's speculative grade liquidity rating to SGL-3 from SGL-2.

The outlook reflects weakened liquidity and elevated execution risk as BWXT continues to make substantial investments to enter the medical isotopes business. "BWXT made heavy use of revolver borrowings to cover cash shortfalls that ensued from capital spending and increased shareholder returns last year," David Berge, a Moody's senior vice president and lead analyst for the company, said in a press release.

"Any unexpected operating set-backs that delay a return to positive free cash flow, incremental share repurchases or acquisitions, will further constrain liquidity and result in leverage remaining elevated beyond 2022," Berge added.

BWXT's weaker liquidity triggered the SGL downgrade, underscored by negative free cash and minimal cash balances, the agency said.

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