BWX Technologies, Inc.BWXT
BWX Technologies, Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
FASB Topic Fair Value Measurements and Disclosures defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. This topic also sets forth the disclosure requirements regarding fair value and establishes a hierarchy for valuation inputs that emphasizes the use of observable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The fair value hierarchy established by this topic is as follows:
•Level 1 – inputs are based upon quoted prices for identical instruments traded in active markets.
•Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for similar or identical instruments in inactive markets and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets and liabilities.
•Level 3 – inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models and similar valuation techniques.
In accordance with FASB Topic Fair Value Measurements, certain investments that were measured at net asset value per share (or its equivalent) ("NAV") have not been classified in the fair value hierarchy. These investments are measured on the fair value of the underlying investments but may not be redeemable at that fair value. Certain of these investments are subject to customary redemption notice periods of up to 90 days. When appropriate, we adjust these net asset values for contributions and distributions, if any, made during the period beginning on the latest NAV valuation date and ending on our measurement date. We also consider available market data, relevant index returns, preliminary estimates from our investees and other data obtained through research and consultation with third-party advisors in determining the fair value of these investments.
The following sections describe the valuation methodologies we use to measure the fair values of our investments, derivatives and nonrecurring fair value measurements.
Investments
Investments primarily include corporate bonds and mutual funds. In general, and where applicable, we principally use a composite of observable prices and quoted prices in active markets for identical assets or liabilities to determine fair value. This pricing methodology applies to our Level 1 and Level 2 investments.
Fair Value Measurements
The following is a summary of our investments measured at fair value at December 31, 2025:
| 12/31/2025 | Level 1 | Level 2 | Level 3 | Unclassified | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Mutual funds | $ | 8,243 | $ | — | $ | 8,243 | $ | — | $ | — | ||||||||||||||||||||||
Total | $ | 8,243 | $ | — | $ | 8,243 | $ | — | $ | — | ||||||||||||||||||||||
The following is a summary of our investments measured at fair value at December 31, 2024:
| 12/31/2024 | Level 1 | Level 2 | Level 3 | Unclassified | ||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||||||||
Mutual funds | $ | 8,775 | $ | — | $ | 8,775 | $ | — | $ | — | ||||||||||||||||||||||
Available-for-sale securities | ||||||||||||||||||||||||||||||||
Corporate bonds | 1,834 | 1,834 | — | — | — | |||||||||||||||||||||||||||
Total | $ | 10,609 | $ | 1,834 | $ | 8,775 | $ | — | $ | — | ||||||||||||||||||||||
Derivatives
Level 2 derivative assets and liabilities currently consist of FX forward contracts. Where applicable, the value of these derivative assets and liabilities is computed by discounting the projected future cash flow amounts to present value using market-based observable inputs, including FX forward and spot rates, interest rates and counterparty performance risk adjustments. At December 31, 2025 and 2024, we had FX forward contracts outstanding to purchase or sell foreign currencies, primarily Canadian dollars and Euros, with a total fair value of $5.2 million and $8.2 million, respectively.
Other Financial Instruments
We used the following methods and assumptions in estimating our fair value disclosures for our other financial instruments:
Cash and cash equivalents and restricted cash and cash equivalents. The carrying amounts that we have reported in the accompanying consolidated balance sheets for Cash and cash equivalents and Restricted cash and cash equivalents approximate their fair values due to their highly liquid nature.
Long-term and short-term debt. We base the fair values of debt instruments, including our Senior Notes, on quoted market prices. Where quoted prices are not available, we base the fair values on the present value of future cash flows discounted at estimated borrowing rates for similar debt instruments or on estimated prices based on current yields for debt issues of similar quality and terms. At December 31, 2025 and 2024, the fair value of our Senior Notes due 2028 was $392.9 million and $374.6 million, respectively. At December 31, 2025 and 2024, the fair value of our Senior Notes due 2029 was $389.3 million and $371.9 million, respectively. At December 31, 2025, the fair value of our 2030 Notes was $1.194 billion. The fair value of our remaining debt instruments approximated their carrying values at December 31, 2025 and 2024.
Note receivable. Included in Other Assets is a note receivable related to a third-party loan. We base the fair value of this level 2 note receivable instrument on the present value of future cash flows discounted at market interest rates for financial instruments with similar quality and terms. At December 31, 2025, the carrying value of our note receivable was $6.4 million and approximated its fair value.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 24, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 22, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 25, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 24, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.