Yesterday, thank you very much for being here, and thank you to those participating online as well. For those of you who I haven't met, I'm Chase Jacobson, Vice President of Investor Relations. I joined BWXT just about a year ago, but I have a long history with the company, having followed BWXT on the sell side through its different iterations and through its evolution as a leading provider of nuclear solutions. I was excited when the opportunity to join BWXT presented itself, and I think you'll understand that excitement when you see the presentation today that provides an in-depth look at our many unique business characteristics and our growth opportunities. So just a few housekeeping items before we begin. In the event of an emergency, please follow NYSE personnel to the exits. There is a staircase located by the elevator bank from which you arrived.
For those attending during the presentation, we'll discuss forward-looking statements that involve risks and uncertainties, and those are described here on the Safe Harbor slide. We'll also make reference to non-GAAP financial measures, which are reconciled to GAAP financial measures, in the appendix of the presentation, which is also on the website. Turning to the agenda, the format today is intended to give you an in-depth look at each of our business lines and their strategies and outlook. We'll start with Rex Geveden, our President and CEO, who will give an overview of the company and our strategies. We'll then move on to Admiral Kevin McCoy, President of Government Operations, who will discuss our global security-focused businesses and give you some insight into how we're driving operational excellence throughout the organization.
Then John MacQuarrie, President of Commercial Operations, will talk to you about how we're helping our customers generate clean energy in the Commercial Nuclear space, both as it relates to large-scale nuclear as well as small modular reactors, where we're very well positioned as a merchant supplier in this emerging growth market. Dr. Jonathan Cirtain, President and CEO of BWXT Medical, will discuss the robust growth opportunities there in both diagnostic and therapeutic nuclear medicine and radiopharmaceuticals. And then finally, Robb LeMasters, our CFO, will provide our financial strategy and updated medium-term outlook. We'll then take a quick break and come back for Q&A, so please hold your questions until then. If you're attending online, you can submit a question through the virtual portal at any time during the presentation.
In addition to the speakers, we have a few other members of our executive team in attendance today that will be able to participate in the Q&A. We have Bob Duffy, our Chief Administrative Officer, Suzy Sterner, our Chief Corporate Affairs Officer, Omar Meguid, our Chief Digital Officer, and Chip Whitford, our General Counsel. Lastly, I will highlight that we are ringing the closing bell this afternoon here at the New York Stock Exchange. We're very excited about that, and we appreciate the opportunity to put BWXT in front of a global audience. So before we get into the presentations, we're going to play a quick video that highlights BWXT's role in providing nuclear solutions to our customers in the global security, clean energy, and medical markets. All right. With that, it's my pleasure to introduce Rex Geveden, our President and CEO.
Thank you, Chase, and good morning. I would like to add my welcome to all of you who came to see us today here in New York, at the New York Stock Exchange, and also all of you who are online watching, following us on the live stream. We're excited to share the BWXT story with you today to talk about the state of the business and how we see the future. Let me start with this.
BWXT is a technology company, as our name suggests, and our purpose, our corporate purpose, is to use nuclear technology to solve some of what we regard as the world's greatest problems: problems like the production of clean energy, problems like providing for the global security, problems like enabling the exploration and settlement of space, and even all the way to providing medical isotopes for one of the most exciting areas in interventional oncology today.
So these are very noble missions. We're proud to do them, and we do them in a variety of markets, and you'll see some of that texture today just about every major and important nuclear market. And we execute these missions in all domains. We're involved in terrestrial programs. We're obviously in the sea with our naval programs. We're involved in space programs now, and we're even in the domain of the human body. If you wanted to translate what BWXT is into numerical terms, you see that grid on the right. We're forecasting $2.6 billion in revenue for 2024, coming off a record $2.5 billion. We're forecasting $500 million in EBITDA for 2024, coming off of $470 million at the end of 2023, as we reported last night. We have about $4 billion in backlog. That translates to about six quarters.
In this long-cycle business, we tend to have between about six and eight quarters of backlog. That will actually pop up this year when we reach pricing agreement with our most important customer. And then we're verging on 8,000 employees. I'll speak about it later, but we hired nearly 10% of our workforce in the net last year. So that's a broad description of the company. This here is about how we are organized as a company, how we face the markets, how we report to our investors, and how we run the business down and in. And there are really two segments here. The donut on the left will give you a sense of the scale, but the government business at the top line generates about 80% of our revenue. And you might think of this as our U.S.-based business. We have six plants in the U.S.
We have one small outpost in the U.K., but this is really sort of the U.S. side of the business. There are four sub-businesses. You'll hear Kevin McCoy speak about these businesses in a lot of detail momentarily, but we're in the global security business. This is our anchor, Naval Nuclear Propulsion Program . We put a global label on that because we've been supporting the U.K. in one way or another since the late 1950s under the Mutual Defense Act. Now AUKUS is upon us, the trilateral security agreement involving the U.K. and the U.S. and Australia, and so we have a market now in Australia as well for that product. Technical services is another, that's a legacy core business where we're using our nuclear operations credentials and using that out in the DOE space to support the DOE in management and operations and also environmental remediation.
We have a little footprint with NASA in that business. We're in space and defense microreactors, having won the flagship programs for terrestrial and space. You'll hear more about that later. And then maybe the unsung hero in this portfolio is the Special Materials part of it. It starts with Navy fuel but goes into downblending. You're aware of those franchises, but we've extended that into uranium metal, and now we're doing HALEU. That's high assay, low-enriched uranium scrap conversion ultimately for Commercial Nuclear purposes for advanced reactors. So an exciting business there that's growing nicely. We reported very robust growth in that business in the fourth quarter. Turning to Commercial Operations led by John MacQuarrie, and you'll hear from John later, there are two important businesses there. One is the clean energy business.
This is Commercial Nuclear power where we make fuel components, provide field services primarily for the CANDU fleet of reactors. That's a global fleet, but it's concentrated in southern Ontario, and we cover the full spectrum of capabilities in that business. And then nuclear medicine, which is our newest business and one of our fastest-growing businesses. We reported last night that it grew about 25% on the top line last year. That business is headquartered in Ottawa and has a significant operation in Vancouver. There we're doing medical radioisotopes for diagnostic and therapeutic purposes. Very exciting business there. So that's how we're organized, how we face the market. This is a little bit of history here about what's been happening epically across BWXT's timeline. So this company became BWXT on July 1st, 2015, at the time we spun from a prior parent, Babcock & Wilcox.
And prior to that, I think it's fair to say that BWXT had been locked up in some larger companies that had their own capital needs, their own strategic intentions. And so it wasn't until we spun out of that situation that BWXT, this kind of hidden gem, could fully express its strategic power. And so what happened between 2015 and 2021 (and we're using 2021 because we came here in November of that year to do our last investor day) what happened during that period of time? Let's say during that time we were kind of standing up as a public company, getting our processes, getting our team, getting our capabilities in place. And I think importantly, in that time frame, we were looking out on the horizon and saying, "Where could we take this company?
Where could we move into nuclear adjacencies or otherwise to figure out how to grow this? Could we be in nuclear medicine? Can we develop microreactors? What can we do around Special Materials? What's out there in small modular reactors, and can we move toward that?" So we were starting to look at that, beginning to apply capital to it, beginning to apply our strategic intentions to it, and that's what happened during that time frame. So what's happened since the last investor day, you may ask, I'd say quite a lot. And the way we might describe that to you is I think we've really been honing the business during that period of time. We've assembled what I believe is the best management team I've ever worked with, and you'll hear from a lot of them later. We have achieved our strategic priority.
We have gone through our major capital campaigns, sharpened our strategic focus, and I would say put a lot more emphasis on operational excellence. So we're moving through, working through the bottom lines of the issue, particularly some campaigns like operational equipment effectiveness that you'll hear about later from Kevin. Importantly, we've significantly invested in human capital. I talked about the assembly of our executive team. I mentioned that we hired 10% of our workforce last year under Bob Duffy's leadership. Bob's in the audience here. We have really improved our human capital mechanisms in the company. What's going to happen from this point forward, from this Investor Day forward? I'd say first and foremost, we regard ourselves as a growth company. We reported 16% growth in the fourth quarter, year-over-year, last night on the call. Also 12% growth for the full year, year-over-year.
We are growing, and I'll have some numbers on this in a little bit. You can see the various ways in which we can grow, and we'll talk about all of them today. We're growing with a particular kind of mindset, and that's what the bottom three bullets are about. I'm going to return to these later, but we have an innovation mindset that I think permeates everything that we do, not just around the development of new technologies, but about how we run the plants, how we bring people into the company. An innovation mindset, a commercial mindset, which is we're going to execute contracts, enter into contracts that have favorable commercial terms to us, exit unfavorable markets in unfavorable conditions, and then this strong emphasis on OpEx that you'll hear about throughout the day.
Now, what is it that makes BWXT interesting in these nuclear markets? And I would say this is kind of the killer app for us, and that is existential capability, which is extremely important in these nuclear markets today. This image that you see on the left, this photograph, is of our Lynchburg plant, Lynchburg, Virginia. I'd say industrial photographs are rarely inspirational, but this one kind of gets to me because it represents sort of the scale and capabilities of BWXT. That plant right there has 2,500 people in it, and this is where we integrate and ultimately ship out the nuclear cores that go onto every aircraft carrier and submarine in the Navy fleet. And that's sort of representational about BWXT altogether. We have decades of nuclear operational experience, and those experiential qualifications are, I think, second to none.
We have world-class manufacturing facilities, 14 operating sites across the world, six in the U.S., seven in Canada, one in the U.K. six of those plants handle nuclear materials. Two of those plants handle special nuclear materials, and all of them deliver products that are built to nuclear qualifications. A very strong human capital portfolio, and in the government business, 95% of our employees possess a security clearance at some level. That says that there's some stickiness in the business for one thing, but it also says that we have good people because you can't misbehave and get or maintain a security clearance. So a high-quality workforce to go on top of all that. We're the only company to possess Category I NRC licenses. We have those at two sites. That means we can handle special nuclear materials.
Your choices, if you're the government, are the government or BWXT. That's enabled us to expand our Special Materials franchise, about which you'll hear more later. Because of all this and other things, we're in a very good competitive position, sole source on a number of our programs, but certainly competitively strong in all the places that we play. Now, in this one, I'm going to describe a little bit sort of the characteristics of the market environment and the business environment in which we operate. These products that we make are, generally speaking, very highly engineered products. A lot of them are very large. We call these high-consequence systems because they operate in generally challenging environments: subsea, space, nuclear power plants. In these systems, there is no tolerance for failure whatsoever. Very obviously, these are nuclear systems, and they cannot fail.
They're designed to go for long periods of time in these very challenging environments. There's logistical complexity in this business: large components, nuclear materials, nuclear materials handling and accountability, built to extreme quality standards. We have very aggressive and very intrusive customers, and that's what comes with the territory, and also very highly regulated. Because of all that, the barriers to entry into this business are quite high. By the way, all the new nuclear entrants are discovering that fact. This is a hard dang business to run. These are hard businesses to get into. But once you're in there, there are some favorable business characteristics. These are very long-cycle businesses. In our particular case, we've got a portfolio that's constructed so that it's relatively insensitive to global CapEx and GDP cycles. The medicine business is driven by medical procedural demand, patient demand.
Our commercial utility business doesn't wax and wane much with the economy. Obviously, the national security businesses aren't sensitive to GDP cycles. We have a certain amount of pricing power that comes with this business and then very good visibility into our backlogs. So hard businesses to get in, hard businesses to run, but with some favorable business characteristics that we like. Now, let me talk about the innovation cycle a little bit. We use the word innovation a lot throughout today to talk about BWXT, and I believe that it's one of the most important adjectives that you could apply to the business, is that we're innovative.
And so the last time we did this investor day, we built this horizons chart that we called Execute, Expand, and Explore, which is run the core business, find some near-nuclear adjacencies, and then look out there on the far horizon for some sort of high payoff opportunities to expand the business. And that's still how we're thinking about how we grow the business today, but maybe this is a little different way to depict it. If you think about us at the time of the spin, there were three core businesses: nuclear Technical Services, Commercial Nuclear power, and the Navy business with a little bit of downblending thrown in. And we looked out there on the horizon and said, "What can we grow into?" And I mentioned this earlier. Could we get into nuclear medicine? What's going on in small modular reactors?
Might we be able to offer to the other components of the government nuclear power and propulsion capabilities for space or in the terrestrial domain? So we began to apply capital to those opportunities. We began to apply our strategic intentions to those opportunities. Then what happens over time is those businesses go from out there on the horizon to being ultimately incorporated into the core if they fit where we're trying to take the business. So that's exactly how we're thinking today. A number of those businesses, microreactors, those are in our core. Special materials, those new lines of business, U-metal and so on, those are in our core. So what do we do next? We look out there. One area that's particularly intriguing is Special Materials, and we think about HALEU deconversion, high-assay low-enriched uranium deconversion. We're interested in radioisotope power systems.
We're interested in national security enrichment. That would be the natural endpoint for our national security materials franchise. And so we're thinking about that all the time, and we're thinking about how we could expand the business in near adjacencies that fit exactly what we know how to do. So that's the innovation cycle. Now, I've got a couple of report cards. I think the grades are pretty good, and as a grade grubber, I like that. When you look at the revenue for the business, since 2015, we've grown about 76%. We finished that year at $1.35 billion. Last year, we finished at $2.5 billion. We're forecasting 2.6+ for 2024. Adjusted EBITDA has grown in a similar way. It was about $270 million at the time of the spin. We finished this last year at $470 million. Non-GAAP earnings per share was $1.42 when we ended 2015.
We're finishing this year at $3.02. Frankly, that underrepresents the underlying growth because we've had below-the-line pension issues and FAS/CAS conversion headwinds that would otherwise have changed that story to the positive. Then our backlog, I mentioned before, carrying about six quarters of backlog and can surge up to as much as about 8 quarters of backlog with our business characteristics. So that's the growth story. So I described this as a growth company earlier. I think this is a proof point for that. Now, here's our report card for since the last investor day. We laid down some financial metrics during that investor day, one of which was for adjusted EBITDA, compounded annual growth. We forecasted mid- to high-single digits over the three to five year period that would follow that investor day.
Right now, we're tracking to 6%, so we give ourselves a check mark on that one, and that's in the mid to high single digits. Free cash flow conversion, we were forecasting at greater than 85%. We're calling that green. We don't have a check mark there yet, but we're making very good progress, and it's inflecting upward, where it's 76% in that period to date, progress to date. And then free cash flow conversion. We promised investors that we would return at least 50% of it back to investors in the form of dividends and share buybacks. And where we are today, 213%, we kind of crushed that one, but we did a large share buyback right after that investor day that kind of guaranteed that one. So that's important.
But I'd say on the right-hand side, if you look back to that investor day, November 2021, there were a lot of things in our future that needed to happen to enable the growth that we were forecasting. And I won't go through this entire list now, but I'm very proud about our achievement of a number of those things. We forecasted that we would drive medical to profitability by the beginning of 2024. We actually inflected positive in the second quarter of 2023, so we got there a little bit ahead of schedule. You'll hear more from Jonathan Cirtain, who runs that business, a little bit later. But we've really got quite some strength in that core portfolio as we look to deploy Tc-99. At the time, we were looking ahead to the Pele Microreactor Award, and we had our eyes on the DRACO final phase.
That's a space reactor that you'll hear from Kevin McCoy about. Those were out there. And what we were talking about at the time is replicating our franchise business, taking the Navy business into new domains and replicating that. In order to do that, you need to win the cornerstone programs, then you need low-rate initial production, and then you need production. And so winning those flagship programs, those cornerstone programs, was crucially vital to the realization of that strategy, and we've done so. We've also greatly expanded our workforce. I talked about re-engineering the talent acquisition process. With Bob Duffy, we added 10% to our workforce last year. And we're on our way with Tc-99 commercialization. We've been saying for some number of quarters now that we expect it to be FDA-approved and commercialized this year, and we continue to stand by that.
We're achieving the milestones in addition to the financial objectives that we laid down. Now, this is a description of how we think about creating value. Those three elements in this chart on the left-hand side I referred to before, which is kind of the mindset that we have in this business: innovation, commerciality, and continuous improvement mindset. We take that mindset through our two operating segments and then through the core capabilities that exist in the company, manufacturing, processing, and services that are all sort of underpinned by this innovation DNA that we have in the company. And we expect that to lead to value creation in kind of two ways. First off, we expect to grow the business. On the upper right-hand side, you see organic growth and market expansion, and we do mergers and acquisitions when those can amplify our strategic intentions.
We never acquire for scale. We're always acquiring strategically, and we're pretty picky about what we do acquire. But that's the growth story. And I'd say if you think about the growth at BWXT, our organic story, I believe, is a pretty impressive story to tell: 16% year-over-year growth in the fourth quarter. As I mentioned, 100% organic growth. Now, on the bottom right-hand side of the chart is our down-and-in focus. We have to satisfy our customer needs. We have to make our milestones and deliveries, and we have to deliver these products to these exacting quality standards, specifications that I mentioned earlier. Within the plants, we're driving OpEx in every one of our 14 operating sites. And then, of course, we're applying capital discipline, high focus on free cash flow, managed working capital, high focus on inflecting positively in returns on invested capital.
All that, we believe, should lead to the value creation that our investors expect and should receive. So I mentioned these key capabilities on the prior chart in manufacturing, processing, and services. This is a chart with a lot of detail, but this chart will articulate the capabilities that we have in each of those categories. We're dealing with a number of key customers, major utilities, major government customers, and others, and participating in a whole variety of end markets. And I'll just stipulate that chart for the record. Now, I want to talk a little bit about it, and I have discussed this in a number of public settings, and I've certainly done so on the earnings call, which is to talk about what are the big secular trends that are underpinning the growth in our business and in these markets.
And as we see it, there are really three. Number one is the great power competition. The great power competition is something that disappeared from the national security lexicon for two decades. We were fighting terrorists. We were in theater warfare, and it just wasn't in the post-Cold War era the way that we thought. It did reemerge and reappear in the National Security Strategy starting in 2017. And the reason that it did is at least twofold. One is, of course, the emergence of China as a global power and their ambitions, their behavior in the South China Sea, their sort of assault on the U.S. with the wide-scale theft of intellectual property and national security secrets. There was that. There is Russia's behavior, its hegemony in the Ukraine, first the annexation of Crimea, and now the broader invasion into Russia.
What that's done is that put us into a global power competition mind frame from a national perspective. That's good for nuclear because what that led to is the recapitalization of the Nuclear Triad. It certainly led to the advent of AUKUS. Australia is worried about what China will do as it sweeps through potentially the South China Sea. And by the way, when you think about the Russian invasion of Ukraine, it brought energy security into stark relief, and nuclear is a very good solution for energy security. That's force number one. Force number two, secular trend number two is decarbonization. There are two important aspects to this one. Number one is decarbonizing the grid, getting rid of the coal sources, the natural gas sources, and other things.
Sensible people have come to the view that nuclear is a part of the clean energy portfolio: wind, solar, hydro, a bit of geothermal, and then nuclear needs to be baseload. Kevin McCoy will talk about it this later. The world's best example is the Ontario Power Grid, which has zero coal, very little natural gas, and it's wind, solar, hydro, and nuclear provide 60% of the electrons on that grid. That's how you do it. That's how you construct a carbon-free grid. So decarbonization is an important trend in and of itself. You'll be replacing those carbon sources with largely nuclear, I believe. But the second thing is, don't miss this one, is the electrification of everything. As you electrify transportation, then the demand moves from the gas pump to the grid. As you electrify industrial processes, then demand moves from carbon sources and onto the grid.
Even stuff that's behind the meter, we expect to be able to address with nuclear. Joe Miller, who's in the audience today, works for Kevin McCoy, is working on trona mining applications of microreactors. People are interested in maritime commercial applications for microreactors. That decarbonization trend is massive, and it'll go on for decades. 20 nations at the COP28 climate conference just committed to tripling nuclear capacity by 2050, and we signed on to an industrial pledge that was similar. Then the final thing is the strong appetite that we see, maybe surprising appetite that we see in other domains. There is a very strong appetite for nuclear medicine right now. That market is quintupling sort of or more over this decade as nuclear therapeutics come into play and produce stunning results in clinical trials, the application of microreactors to commercial opportunities and various others.
So the appetite for that's the third secular trend that we believe supports growth in this business. You'll meet a number of these. This is my executive team here. It's a new-ish team. Five of these members have been in their jobs. Five of these executives have been in their jobs for two years or less, and another two of those have taken on new titles or new scopes and responsibility over that period of time. I think it's a tremendous team. I think you'll agree as you hear this team talk about what they're doing in their businesses and as we go through the Q&A today. Very excited to work with this team. So what's the investment thesis? I just talked about the major secular themes. And so on the macro, there are very interesting reasons to be interested in BWXT.
All of those secular trends support the growth in our markets in which we participate. And then we have a scale and differentiation that is second to none. I have said since I occupied this seat as the CEO that if you built a nuclear company from scratch, you might build this one. You'd want naval nuclear propulsion. You'd want the high leverage of Technical Services. You'd want some exposure to Canadian nuclear power. Canada's industrial policy's been ahead of the rest of the Western world on nuclear, and we've got tremendous scale to go with that. We have this management team. You're going to see it today, and I'll return to this point a little bit later. And then our strategic positioning is set to drive growth, and so we can move the top line, and we're demonstrating that. But we can also move the bottom line.
So the disciplined approach to capital allocation, the disciplined approach to operational excellence, all should deliver shareholder value, and that is the investment thesis for BWXT. Okay. With that, I'm going to step on the stage. I'll return a little bit later with a couple of capstone charts at the very end. But let me introduce Admiral Kevin McCoy, who is the leader of Government Operations and runs about 80% of our business from a revenue line. Over to Kevin McCoy. Thank you very much, Rex.
Good morning. Excited to be here today. I actually grew up about 35 miles from here. It's good to be back. I joined BWXT about two years ago with over 30 years of experience with the Navy's nuclear fleet. I spent a majority of my career in the Navy, rising to commander of the Naval Sea Systems Command, or NAVSEA. I also served as chief engineer of the U.S. Navy. I commanded a nuclear shipyard, and I held a number of other roles across the Navy's nuclear propulsion program. Earlier in my career, I served on the staff of our largest customer, Naval Reactors, for four years. I know that customer very, very well. When I had the opportunity to join BWXT, I was very familiar with the company. I identified with its great mission.
I knew it had great people, great technical capabilities, and tremendous growth opportunities. I had a lot of experience with suppliers in my time in the Navy and in my eight years leading Canada's largest shipyard in the private sector. None of these suppliers really had differentiators quite like BWXT. We've made a lot of progress as we continue to grow the company and improve our processes, as Rex talked about. We've broken into some exciting markets, and I'm glad to be part of the team. Okay. How do I do this? Oop. Hold on. There we go. These are a handful of the key topics that I'm going to be talking to you about today. BWXT has been serving the Nuclear Navy with reactor components and a fuel essentially since the Nuclear Navy was first started by Admiral Rickover in the late 1950s.
This experience is something that no other company comes close to having. We are the sole provider of nuclear propulsion components to the Navy. Most of you are aware of this. It's a big differentiator for us and gives us great visibility into the future of our business. Importantly, it has given us entry into many other areas of the nuclear complex. We've built a solid portfolio in our Special Materials business that didn't exist in the past. We have incredible technical expertise, well-established production lines, and our Category I licenses to handle highly enriched material provide us with some interesting opportunities. We've successfully broken into the microreactor market with the Cornerstone government programs for land and space-based microreactors, along with fuel solutions for each. Importantly, we've had a great track record.
We've built over 400 reactor cores for the Navy with no safety incidents, which goes a very long way in the nuclear industry. Before I get into the details, I would like to set the stage and take a moment to discuss the evolution of the Government Operations segment and what the future may look like. As Rex discussed, historically, we've been a division within a larger company that had very different operating characteristics, and there wasn't a lot of focus on growing this part of the business at that time. Post the spin-off in 2015, we took a hard look at our strategy and decided to pursue more growth with a vision of building off the naval propulsion franchise that we have established over the years.
When I joined in early 2022, we were looking at many of these, such as different programs and Special Materials, restarting TRISO, microreactors. Quite frankly, it was exciting. Fortunately, we've had some good successes there. Over the last year or so, we were certainly focused on growth, and we're also spending more time honing the business, making sure we can effectively and efficiently execute on the growth that we see ahead, as Rex discussed, making sure that we're getting the most out of our equipment and making sure that our shop floors are organized in an efficient manner and making sure we have the right processes in place. We also completed the BWXT Innovation Campus, or BIC, as we like to call it, which is the new home of our emerging reactor franchise. It's really a production facility and a rapid prototyping facility.
Importantly, and I know this has been an important topic for the investment community, is we've completely revamped our hiring and retention processes. As we look to the future, the growth that we are seeking and the focus on operations are now a core part of our business. We're increasingly using technology such as additive manufacturing, artificial intelligence, and other digital tools, not only to improve the quality and efficiency of our operations, but also to train our people and get them operating at full capability more quickly. We'll continue to grow organically in all our businesses with a focus on expanding microreactors and Special Materials. We'll prepare for that growth with disciplined capital investments, and with a culture of innovation better instilled in our workforce, we'll continue to seek new growth vectors.
This slide is similar to what Rex showed as we look at our core capabilities around manufacturing, processing, and services, but with a specific focus to Government Operations. So I'll start with manufacturing. We have five main manufacturing production facilities that are staffed by over 5,800 employees, most of whom have government clearances. We manufacture nuclear propulsion components and fuel for the Navy. We're building the prototype for projects Pele and DRACO, and we've produced several special nuclear fuels. Processing is mostly what you think of as our legacy Nuclear Fuel Services business, which we've been referring to as Special Materials. This is where we do downblending. We won a contract last year for uranium metal purification, and this is where we're developing new fuels such as TRISO.
And then in services, we have contracts to lead the management and operations and environmental restoration at 11 DOE and NNSA sites and laboratory complexes. And before we leave this slide, it's important to understand that each of these capabilities rely on each other and that none of these capabilities would really exist, or at least to the extent and depth of expertise of which they do, without the other. It's a real key differentiator for BWXT. For example, our work with Special Materials to produce fuels is how we won Project Pele and Project DRACO. All right. I'll start off with our core naval propulsion business, which really fits within the and is the foundation for our expertise in manufacturing. Many of you have probably seen this slide before.
The components highlighted in red are what we make for naval propulsion reactors, essentially everything in the nuclear reactor space aside from the pumps and the valves. Our unique infrastructure and licenses that Rex talked about are really in play here. So the Category I NRC licenses, the infrastructure that has been invested in four years, the facilities, the IT systems, equipment, security, all of it important. The understanding of what the customer wants and being aligned with and fully supporting their mission is equally as critical. And of course, the people. As I mentioned, we have a highly skilled workforce of which about 95% hold government clearances. And having been on the customer side, I can tell you how important all of these really are.
These are the key platforms that we supply to, the current ships being built and serviced in the U.S. naval nuclear fleet, and now also with an emerging international opportunity. So we have the Virginia-class and Columbia-class submarines. Virginia, it's a good steady program for us. It's maturing, but still plenty left to go. Columbia, it's ramping up nicely. We're now in a 10-year period where the Navy is ordering one per year. So very nice growth potential for BWXT. Our first Columbia order came in 2019, and we expect to deliver the completed core by the end of this year. For the Ford-class aircraft carrier, it's important to note here that an aircraft carrier has two reactor propulsion units, whereas each submarine has one. And each of the carrier units is bigger than on a submarine.
And the carrier gets refueled after 25 years while the submarines have life of ship cores. So Ford's a big program for us in terms of relative value. And then on the bottom, you can see the one here that is new is the SSN-AUKUS submarine. This is the ship that is being developed jointly under the trilateral security agreement between the U.S., United Kingdom, and Australia. Program is in its very early stages. The details are still being worked out, but we do expect to have content on the ship, and we'll provide more updates as appropriate. We're very excited to have this new international opportunity, which we really never thought we'd have in this business. So when we look at these programs, we have incredible visibility. Every year, the Navy produces a 30-year shipbuilding plan.
Right here, I have to grin because when I led NAVSEA, part of my job was to develop this plan with the Navy leadership. So now I get to live it as a supplier. Historically, the need for a strong Navy has received good bipartisan support, and we continue to see that today, particularly with heightened tensions in the world. When you look at the stated goals of where our Navy wants the fleet to be, we think it's supportive of a robust outlook for our business over the long term. Recall that Rex alluded to the great power competition, which we expect will be with us for quite some time. On the Ford-class aircraft carrier, which is the backbone of the Navy's battlegroup warfighting approach, we expect one order every four to five years.
Virginia-class is expected to remain steady at about two per year as the mainstay of the Silent Service. Columbia-class, well, it's the highest acquisition priority in the Navy as a strategic deterrent. As I mentioned, it's now in a 10-year serial ordering pattern. Our business generally gets awarded ship set content two years before the procurement, which is listed here on the sheet. For instance, if you look at Columbia-class, you can see the next order for Columbia-class is in 2024. You can think of that start as a 2022 start date for us at BWXT. I'll also point out that this schedule does not include anything for the incremental three to five Virginia-class ships that are anticipated to be sold to Australia under the AUKUS agreement. Depending on how that plays out, you could see some adjustments in the Virginia-class ordering schedule.
So what does all this actually mean for BWXT? Well, what we tried to do here is conceptually show you how the shipbuilding ordering cadence will translate into the amount of work going through our facilities. It's hard to line up this perfectly because, as you all know, programs don't start on January 1st and don't end on December 31st, but it gives you a sense of how our business could build over the next 10 years. What you see here is Virginia-class remaining steady, Columbia-class ramping as we get into that serial ordering cadence. In the near term, this is partially offset by some lumpiness, if you will, in the Ford-class aircraft carrier ordering cadence.
We've been talking about this for a while, since the last Investor Day, in fact, that there would be a lull in Ford production for us in 2024 and 2025, with only one ship set going through our facilities before picking back up again in 2026. We also added the shaded light blue area to give you a sense of the opportunity if we were to build additional Virginia-class submarines to backfill the potential ships sold to Australia under the AUKUS agreement. These plans are not finalized, but we wanted to at least give you a sense of what this could look like. And while the cadence of units going through the facilities is an important indicator of operating tempo, it's also important to note that our contracts are open book with the customer based on our total costs. And they know that we have pretty significant fixed costs.
Whether we have 10 units going through our factories or 12 or 15 or however many, we're going to have the same number of security guards, the same number of NRC regulatory supervisors, same number of engineering managers, etc. So this mitigates the effects of ups and downs from the number of units in our outlook versus what might be implied from solely looking at this chart. Nonetheless, as you can see, we have very good visibility. Standing here today, we think this translates to a 3%-5% compound annual growth for the foreseeable future. This slide is an overview of how our contracts with the Navy work. Every two to three years, we sign a pricing agreement for a set of ships that will be ordered in the next two to three years, and then we work through that for the next 8+ years.
So there are many layers of cake, so to say, going through our business at any one time. Our contracts are under a fixed price incentive fee structure negotiated on an open book basis with the customer, with about 15% markup on costs. So that translates to about 13% margin at the start. We have historically done well versus our cost estimates, which has driven our margins higher as we share in those savings, but it's not an easy feat. Similar to what the broader industry has experienced, we've had to deal with increased attrition resulting from COVID and post-COVID demographic trends. We've overhauled our hiring and retention processes and have seen a significant improvement in attrition rates and have meaningfully grown our workforce over the last year. In fact, in my Government Operations segment, we netted 480 additional employees last year alone.
And while this has driven an increase in labor rates, putting some pressure on margin upside, our efficiency is improving. And we're always working on ways to find productivity and cost improvements, which I'll talk about in a moment. Lastly, I'll note we're working on finalizing our next pricing agreement and expect to have that complete in the coming months. So this slide digs into the detail of how we work to drive productivity improvements and savings in our business and across the whole company, for that matter. One of the things that I have implemented since I joined is an effort called Operational Equipment Effectiveness, or OEE. Our manufacturing processes require very large and expensive machines to produce large reactive vessels and components. So if this equipment is not running, it creates a bottleneck in our facilities and decreases throughput.
We're working on increasing the amount of time our machines are running and decreasing time required for things like maintenance, machine setups, inspections, and other interruptions to actually turning the machines. We're improving other parts of our processes as well, driving significant improvements in all of our areas of production. Over the last two years, we installed specialized software on over 70 machines to analyze why machines were experiencing downtimes and to identify and attack the causes of those delays. This result has been a 40% improvement on operational equipment effectiveness and an almost 500 basis point improvement in overall efficiency across our manufacturing plants. We're also using technology. We've implemented various types of additive manufacturing. We're accelerating employee development with digital tools.
For example, we're deploying videography equipment at the place of welding to collect images and learn how to anticipate when a weld defect might be occurring in real time. Also, supply chain. It's a big focus for us. To be clear, we haven't experienced the supply chain challenges many other defense and industrial companies faced over the last several years. We don't order hundreds of thousands of line items like a shipyard or an aircraft manufacturer might do. Instead, we have a much smaller list of key raw material providers, and we try to lock in about 70% of our materials early on in the contract lifecycle. And we're always looking at ways to centralize supply chain and get more out of each purchase.
We have a lot of exciting growth opportunities, but I want to make sure it's clear that we are intensely focused on driving efficiencies into the business. Moving on to the next piece of Government Operations, our microreactor business leverages our manufacturing capabilities, the deep technical knowledge of our people, and our processing capabilities, particularly as they relate to specialty fuels. What we're really doing here is trying to replicate our naval franchise. Relative to other nuclear reactors, think of a microreactor as an off-grid application. These are much smaller than the utility-scale reactors that John MacQuarrie will talk about in his presentation on Commercial Nuclear. A microreactor generally produces 1-20 MW of power output, enough to power about 15,000 homes or, in our initial use case, a portion of a military base.
Our view is that microreactors are initially a strategic defense application on land and in space, with commercial opportunities coming on down the road. As you can see here, the market opportunity has some big potential. There are dozens and dozens of forward and remote operating bases with electricity consumptions estimated to be in the 1-5 MW range. This aligns well with the power output of a microreactor. Currently, these bases rely heavily on diesel generators, which come with high costs and tremendous risk involved in transporting diesel fuel, particularly in a hostile or contested environment. It's estimated that it takes 7 gal of diesel to get 1 gal delivered to its end user point in a remote area.
So in remote areas, it's not only a logistical risk, it's also a massive safety risk due to the amounts of people required to execute and secure that transportation. Of course, microreactors would also provide significant environmental benefits as a source of clean power. With the need for stable power for military applications such as high-powered radars, the electrification of weapons, and tactical military vehicles, dense amounts of consistent power are increasingly needed at these bases, making microreactors a unique solution for that demand. We're also currently, as Rex said, in discussions with customers in the mining, oil and gas, commercial maritime, and data center industries to explore ways that our microreactor technology can support their power needs.
Microreactors have been a big focus for us over the last few years as we started to see more interest from our national security customers looking for power generation alternatives in the field. And when we looked at our capabilities, we really thought, "This is something we could be successful in." And that has played out over the last couple of years. We won the cornerstone projects in the defense industry with Pele and DRACO, Pele on land and Project DRACO in space. Our goal, as I mentioned, is to build off of these successes and eventually replicate the naval franchise. We believe that as Project Pele continues to develop and defense customers increasingly see the value of microreactors, we could get into low-rate initial production rate scenarios.
Getting into a steadier production cadence should allow us to get the cost down and then make this more of a commercial application where we would be selling a fully manufactured and fueled product to the end user or an operating customer. One key factor I want to note is that you see a lot of microreactor developers out there in the market. Each company has a little bit of a different strategy around who ultimately owns and operates the microreactors that are being developed. Our goal, to be clear, is to be a true manufacturing partner. I also want to emphasize that we're going after the national security part of this market first. We think this is where these solutions make the most sense and have the best sources of funding.
As we go through these developments, we can essentially use the government funding to perfect our designs and manufacturing processes and ultimately make these more affordable for commercial use. And we're doing this through cost reimbursable contracts. So although there's a headwind to our margin in the near term, there's significantly lower financial risk, which is really important for these first-of-a-kind projects. We're well positioned to remain a leader in this market. We've built over 400 reactor cores for the Navy. We have a dedicated workforce and dedicated manufacturing space. You've heard us talk about CapEx investments required for Pele and DRACO. A lot of that has gone into our BWXT Innovation Campus, or BIC, which is located adjacent to our Lynchburg manufacturing facility for Naval Reactors. And you can see it at the bottom left picture in this slide.
It's a state-of-the-art manufacturing facility, new home to 300 members of the team that are dedicated to microreactor development for terrestrial and space applications. A lot of microreactor developers out there have interesting design capabilities, but they simply don't have the same facilities and infrastructure that we have. They certainly don't have the licenses or the experience of actually building reactors and reactor equipment. When you're asking a potential customer to spend $hundreds of millions on a strategic purchase, our history and established infrastructure is a huge advantage for BWXT. We feel that we're extremely well positioned in this market. That is evident when you look at the slide and the projects that we've won. We're executing projects in all the major domains, as Rex indicated, Project Pele in the terrestrial defense domain. We won this project in 2022.
It's going well, and we're on track to deliver the prototype to Idaho National Lab by the end of next year. Project DRACO, we just announced this project in the summer of 2023. This was a critical award for us as it gave us entry into the space domain. We competed against a few others for this, and we broke through successfully in a partnership with Lockheed Martin. It was really based on our fuel capabilities. DRACO is a nuclear thermal propulsion application, and we're pursuing other power applications in space as well, such as through JETSON and lunar surface power with NASA. We're also working on other novel radioactive power systems that we believe will be fast followers to nuclear propulsion in space. And as I mentioned, we have a few early opportunities in the commercial space, and we would expect that list of opportunities to grow as well.
Now, moving on to Special Materials, you've heard us talk about this in the past as nuclear fuel services or uranium processing. It's a very strategic and unique business for BWXT. BWXT and the government are the only holders of NRC Category I licenses, which enable us to handle highly enriched uranium and quantities of other unique materials. Our customers here range from the NNSA and Naval Reactors to the Department of Defense and now NASA and DARPA through Project DRACO and other microreactor projects. Our capabilities and history in this market are really unmatched when you think of the consequences of the materials that we're working with. I think a few of these capabilities are pretty self-explanatory around our technical expertise and our safety standards.
But I also want to point out our handling and accountability of these materials as well as security protocols and infrastructure for safeguarding them. Generally, we receive these materials that we work with from the government. And throughout our work, we are accounting for literally every milligram of material that comes in and goes through our facilities. So you can imagine how tight our processes are that we have to have in place to do that. Similar to our other businesses, we have a portfolio approach to our Special Materials franchise. I think a lot of people think about BWXT as a manufacturer of naval fuel and downblending services, but we're a lot more than that. We're doing uranium metal conversion and purification. This is a five-year, $428 million contract that we won in early 2023.
This is work that was historically done at national labs, but back in 2020, we saw an opportunity to help the labs with the standing up of this challenging process. So we set up a pilot project, and the customer ultimately awarded us a longer-term contract. We're the only company that we know of producing TRISO fuel at scale. This is a specially coated fuel that will be used in advanced and microreactors. That might have this one here. Yeah. It requires immense precision. Others say they can do it and have tried at a very small scale, but full-scale production is quite different and not being done anywhere else. Not only do you have to have efficient production, but you must have no errors or the customer will not accept the product.
For instance, one of our customers demands that we can have no more than one particle imperfection per 10,000 particles. Think of that. Now, bringing all this together, you can see our special material portfolio here with a solid long-term outlook. We've built on the naval and research and test reactor fuel franchises. We've expanded into downblending. We added U-metal and TRISO fuel. We're supporting the DOE's Advanced Reactor Development Program by making HALEU oxide for SMR development programs. We're looking into future opportunities. These could be related to uranium or in other strategic national security applications where we can leverage our unique capabilities. Moving on, this is our Technical Services business where we manage and operate and provide environmental restoration services to various Department of Energy, NASA, or NNSA sites and labs.
We've been in this business for over 30 years, and we're on about 1/3 of the sites nationally, and there's great operating characteristics. We operate this business under a joint venture structure with various partners. We use investment dollars to create JVs, and the contracts can be 5-10 years, often with extensions. So it's another business with great visibility into future earnings. And these contracts are typically cost-plus contracts with fees. The overall contract margins are in the low-to-mid single digits. However, because of the JV structures, we account under the equity method accounting. So while you see here on the slide the approximately $1 billion of unconsolidated revenue, there's only a small amount of that revenue going through our income statement. And we've done a tremendous job rebuilding this franchise. We generated just over $50 million of equity income from this business in 2023.
As you can see, there are some large opportunities here over the next couple of years. We remain hopeful of winning the Hanford Tanks Award that was protested last year, and we're currently waiting a decision by the DOE. We also have some opportunity to expand into Canada at the Chalk River site, which is Canada's largest laboratory complex and is very similar to Idaho National Lab or Oak Ridge National Lab, where we have prominent roles and outstanding performance in supporting critical nuclear research. We see a good outlook for this business overall. Putting this all together, we have a solid pathway to mid-single digit EBITDA growth over the medium term. In 2024 through 2025, we have a headwind from the aircraft carrier ordering gap that I discussed, and we are continuing to work through labor inflation.
But we have Columbia-class submarine ramping, and we have new programs coming in in Special Materials, and we hope to have new awards in Technical Services and microreactors. In addition, although not fully defined yet, we have prospects for AUKUS. So overall, we'll get some revenue growth and I think modest EBITDA margin expansion at the segment level. To summarize what you heard from me today, we have decades of nuclear operations experience on some of the government's most critical programs, including our sole source position as provider of nuclear propulsion components and fuel for the U.S. Navy. We have five very well-established facilities with a robust and highly trained workforce, which, combined with being the only company to possess an NRC Category I license, has set us up to expand into some very interesting markets.
We're growing our Special Materials franchise, and we're excited about the growth opportunities in microreactors as we execute on the cornerstone projects in terrestrial and space domains. All this adds up to good visibility into our future performance, and we're confident for our outlook for the mid-single-digit EBITDA growth over the medium term. Thank you for giving me the opportunity to speak with you today and shed some light on our Government Operations segment. With that, I'm going to turn it over to John MacQuarrie to talk about our Commercial Nuclear business. John?
Yeah. Thank you. Good. Thank you, Kevin. Good morning. I'm John MacQuarrie. I'm President of the Commercial Operations segment. For my background, I've been with the company for 25 years, and before working for BWXT, I worked for the company that designs CANDU reactors. I'm going to talk about the Commercial Nuclear power part of Commercial Operations, but the other part of Commercial Operations is BWXT Medical, and Jonathan Cirtain will talk about that following my remarks. Okay. So the key messages about our nuclear power business are that we have unique strengths, capabilities, and market position. We have very long-term demand driven by supporting operating fleet, but in addition to that, driven by life extension projects in Canada and abroad. We are positioned to capture advanced reactor opportunities, including small modular reactor opportunities, as a premier merchant supplier to that market.
Finally, as you've heard earlier, nuclear power is clean and essential to decarbonize electricity grids. So we see a lot of growth of nuclear power generation in the future. Okay. I'll give you a bit of an overview of our Commercial Operations business. We had $400 million in sales in 2023. That was divided somewhat evenly among our OEM components business, field services, and our fuel and fuel handling services that we provide. Most of that was with Canadian customers that we support, as I said, with fuel and maintenance services for the installed base, but also significant demand for original equipment to support life extension work that has been ongoing for some time. There's some really special things about our business.
First of all, we're the largest nuclear manufacturer in North America, and we are the only manufacturer of really large nuclear components in North America, so things like steam generators, reactor vessels. We have strong customer relationships. Nuclear operators are highly risk-averse, and so they only buy critical components and services from companies that they know they can trust to deliver. And we've got a long track record with our customers of meeting their expectations. We are the developer and the original equipment manufacturer of the highly unique on-power refueling systems that are used by CANDU technology. So CANDU technology are the only reactors in the world that refuel while they operate. We're also one of two fuel manufacturers in Canada. We've been doing that for decades and have a really solid track record of delivering high-quality fuel for our customer.
We offer very specialized field services that really leverage our OEM expertise but also involve a bunch of unique technology that we've developed to deliver that really specialized service that we offer our customers. We've been doing all of that for more than six decades successfully for our customers. With regard to our growth strategy, we view BWX as our commercial manufacturing business as a leading partner for our customers, so both in manufacturing and in servicing. We've got a strong incumbent position in the Canadian market and international CANDU market. We're really embedded in that supply chain. We have IP and lots of know-how in that. But we've also created a role for ourselves as a merchant supplier in the small modular reactor market.
So with that perspective, our goals are to maintain our position in the CANDU market in Canada and globally as that grows, to continue to focus on operational excellence and serving our customers very well, and then to selectively look to expand to grow our product and service offering as we have been doing, and then leverage our expertise to serve the growing advanced reactor market, including small modular reactor market. We expect a significant wave of growth in nuclear power generation globally. The outlook is optimistic because, as you heard from Rex, nuclear power is one of the only viable, clean baseload power generation technologies that can be used to decarbonize electricity grids. We see a lot of CANDU reactors being built as part of that wave of growth.
Also, as Rex mentioned, at COP28, there was more than 20 countries, rather, that signed a declaration to work together to more than triple nuclear generation between now and 2050. And as you can see here, we expect at least a doubling of the generation of power by nuclear power in that next three-decade time period. Now, CANDU technology has some really interesting advantages over other large-scale reactor technologies. So think about sort of gigawatt or 1,000-MW-sized plants. And two that I think are really quite advantageous are, one, it's fueled with natural uranium fuel, so no need for enrichment. And second, as I mentioned earlier, they are refueled while they operate. So they have the longest operating cycles, the world record for the longest operating cycles, and very high capacity factor.
There's 27 operating CANDU reactors in the world right now, 19 in Canada, and that's about 10% of the Western world's reactors. Now, the Canadian market is obviously very important to us, and it's got some really good visible growth drivers for our business. First of all, energy policy is remarkably supportive for nuclear power in Canada. There is a requirement to phase out all coal-fired generation by 2030, less than six years from now. There's also a national carbon tax in Canada. That was CAD 65 a ton of CO2 last year, and it's going to CAD 170 per ton by 2030. So anything that emits carbon is significantly disadvantaged. There's also good investment tax credits that apply to nuclear, and there's good public support for it. So all of that is a very favorable environment in our market.
As I said, there's 19 reactors in Canada, but 18 of those are in Ontario. So very important market for us, and that's where all our facilities are and our two large customers. The grid in Ontario is a gold standard for clean electricity production, anchored off that baseload of nuclear generation, which is typically 60% of that grid. There's no coal, and there's very little gas. So you'll see gas generation at the moment because units are offline for life extension, but typically almost no gas in that grid. And electricity demand is expected to significantly increase in Ontario over the next 30 years, likely to double due to electrification of transportation, heating, electrical or industrial processes, and nuclear production is expected to double in that same time period. Now, there's two large customers in Ontario, Ontario Power Generation and Bruce Power.
OPG operates 10 reactors at their Pickering and Darlington site, and Bruce Power operates eight reactors at their site, which is the world's largest nuclear generating site. We have our facilities very close to them. We work in their plants all the time. We serve them, as I mentioned earlier, in a couple of ways. We provide fuel and maintenance services for the operating fleet, but we've seen significant demand for original equipment as they go through life extension. Together, that's about a $2 billion annual market that we're in. Now, life extension projects have driven a lot of revenue for us over the last few years, and there's two ongoing life extension projects right now. Ontario Power Generation is working through extending the life of four of the reactors at their Darlington site, and Bruce Power is working through extending the life of six reactors at their site.
This is going very well. A number of their reactors have gone through this complex evolution, are back-connected to the grid. That was done safely, on time, and within budget. So remarkable work well done. Now, OPG has announced just very recently that they are planning to life extend four reactors at their Pickering site. They've announced they've started with $2 billion of engineering and long lead procurement to get that project rolling. So very exciting for us. But on top of that, we're seeing some really interesting other emerging opportunities. So Bruce Power has announced that they're looking at adding up to 4.8 GW at their site, already the world's biggest nuclear operating site, but they've got the capability to add more there.
They're working with the government of Ontario as there's that expectation to double the size of the nuclear fleet in Ontario. There's life extension projects internationally that need to happen as those international units reach the point where they need that. And we're seeing a very exciting opportunity in Romania. So the Romanians have two CANDU reactors. They're going to add two more. They've been working on this for quite some time. They've got all the financing in place. They're negotiating contracts. So that is looking very positive as an opportunity for us. So we have significant opportunities for CANDU life extensions and new builds. We've got a portfolio of components, equipment, and services that we offer for either life extension or new build. And in the near term, we've got life extension work ongoing and emerging right in front of us.
In the medium to longer term, we do expect new builds and CANDU new builds. What we've illustrated on this chart is for a CANDU new build project, we estimate that our content or our addressable market is about 10% of the project cost. So what that means for us is that we see about $500 million-$1 billion of addressable market per life extension or new build project, depending on the scope of those projects. Okay. I'd like to pivot from talking about the CANDU market to talk about the small modular reactor market, which is a very exciting market that has started, and we see a lot of growth potential in this. We're positioned to support this market as a merchant supplier. I talked about this a bit at the last investor day, but now it's really happening with real projects.
I think SMRs have gotten the traction that they're getting for two reasons. One is there's a recognition that you need nuclear power for clean electricity. And two, as you can see on this chart, they have some unique attributes relative to larger reactors. Three that are, I think, particularly remarkable are they're smaller, which works well in some grids. They're more affordable, and some of them can operate at higher temperatures. We see this market primarily as a North American and European demand for us. As we think about that fleet growing between now and 2050, we see that SMRs are going to fill about a third of that capacity, so a significant amount of SMRs, in our view. We're really seeing this happening now. Ontario Power Generation and our home market in Ontario is committed to build four SMRs at their site.
They're working with another provincial utility in Canada, in Saskatchewan, known as SaskPower, who's interested in that same technology to lessen their dependence on coal, which they must shut down by 2030. Also working with Tennessee Valley Authority, or TVA, who's expressed interest in a fleet of SMRs in their system. And then there's some really interesting emerging activity in Eastern Europe, particularly in Poland, where a company called Orlen Synthos Green Energy is talking about a fleet of SMRs to reduce the dependence that they have on coal, which is a really significant dependence in Poland that they need to shift away from. And the UK market looks like a really good SMR market as well. So we've got an actual project going on in Ontario, and we've got some really good prospective projects that are coming. There's a lot of SMR technology developers.
We don't know that all of them will be successful, but we see that there's going to be a significant demand here, and we think we're really well positioned to meet that demand. Now, with regard to our positioning, I just want to talk about why, for us, serving the SMR market as a merchant supplier is a really good position for us and for our customers, who are the SMR developers. Some SMR developers may develop manufacturing capability, but most will not. And so they are looking for a partner that can deliver what they need and that they don't have to invest in and develop. We've got the special manufacturing capabilities, as you can see here, and the experience required to build the largest, most critical components that these plants need.
Being technology-agnostic is particularly helpful, and I think it's why we've had some good success here with some of these leading SMR developers, because they come to us knowing that we're not aligned with any particular technology. We're here to serve them in what they need. I think, finally, as OPG is on track to be the first operator in the Western world to connect an SMR to a power grid in our home market, we're really well positioned there. Because of that positioning and our capabilities, we've had some recent wins. I just wanted to talk about two here. As I said, OPG is moving ahead with 4 SMRs at the Darlington site. They've selected the GE Hitachi boiling water reactor SMR, known as the BWRX-300. That's the 10th evolution of that design for GE.
GE has contracted us to design the reactor pressure vessel, and we expect to be building or manufacturing all four of those reactor pressure vessels for the Darlington site. TerraPower is developing a very innovative SMR called the Natrium Reactor. It's a fancy reactor that uses a liquid metal coolant. They've selected us, after a competition, to design these heat exchangers that go in the core, that transfer heat from the core to their storage system. And they came to us because they don't have the capability to do this themselves and because of our unique experience in this particular area and our ability to manufacture these very large components. So these are leading SMR technologies. We're in there early with them, and we think we're really well positioned to be a top-tier supplier as this market grows. All of this leads to a fairly positive outlook for our business.
We've got a stable base of demand supporting the CANDU fleet in Canada and abroad, fuel and services. In the medium term, we've got life extension projects that are ongoing, new ones that are starting, new international life extension projects, and these SMR new builds in Canada. And in the longer term, we expect CANDU reactor new builds in Canada. We expect a global buildout of these SMRs that we're building in Ontario, and I believe we'll have a global buildout of CANDU reactors like we've seen in the past. So we expect solid growth in our nuclear power business. Okay. To summarize, the key takeaways, again, are we have unique strengths, capabilities, and market position. We've got good visibility to demand that will drive growth anchored by the Canadian market. SMR opportunities are real and growing, and we're positioned to serve that market as a merchant supplier.
We're in a robust global market driven by the need to decarbonize with clean nuclear power. I'll finish with that, and I will hand it over to Jonathan Cirtain, who will speak to you about BWXT Medical. Jonathan.
Thank you, John. Well, we've heard defend the nation, explore outer space, fight climate change. Let's talk diagnose, treat illness and disease. So I'm Jonathan Cirtain. I've been with BWXT since 2017. I've had the good fortune to lead many of our technology development and new business beginnings, including starting the medical business in 2018. So I'll overview several key messages similar to what you've heard from my colleagues: manufacturing, processing, services, merchant supply. These are inherent attributes of BWXT Medical as well. Our early efforts to develop and monetize radioisotopes for medicine led to the acquisition of the rare and specialty licensed infrastructure necessary to produce and manufacture these hard-to-manufacture radiopharmaceuticals. The combination of our proprietary technology and these new assets facilitates the BWXT approach focused on improving how the value chain of radiopharmaceutical industry supports the patient community.
As we do in other nuclear industries, we serve the market as merchant suppliers. We have a growing, differentiated suite of manufacturing, processing, and service offerings. All this is to address what we believed in 2017 to be a growth market. Certainly, that's being played out recently, and we believe there's a strong promise for continued future growth. Admiral McCoy and Rex both discussed this, but BWXT has a rich and deep history and the accompanying expertise handling specialty materials we then use in high-consequence manufacturing. After the spin in 2015, medical was an interesting adjacency where we could deploy disruptive technologies for novel target irradiation services and radiochemical processing. We then set out to develop the IP and the needed supply chain relationships that then led to the acquisition of the assets, the medical isotope assets, from Nordion.
It's important to note that the legacy of medical isotope processing and radiopharmaceutical manufacturing acquired in Canada extended back many decades, as does the BWXT nuclear manufacturing legacy. The Canadian federal government invested heavily in the development and construction, support, and growth of this infrastructure and the associated workforce capabilities, eventually leading to the commercial enterprise we acquired. The merger of legacy capabilities, of new technology, of uniquely licensed infrastructure enables our future state. The infrastructure and workforce in Ottawa and Vancouver, and now our target delivery system installed on the Darlington reactor, are all world-class. John mentioned this. The Ontario Power Reactors hold the world record for longest continuous power operation. In fact, our target delivery system can manufacture a substantial amount of mass and volume of isotopes now in operation. We sit on the campus of the largest cyclotron in Vancouver.
Decades-long operational excellence has led to extensive relationships throughout the nuclear medicine and radioisotope industries. For either radiochemicals or radiopharmaceuticals, we maintain dedicated processing and manufacturing spaces, resulting in fully integrated end-to-end manufacturing operation for access to stable isotopes, irradiation services, radiochemical processing, radiopharmaceutical manufacturing, and their distribution. So if you look at the forecasted growth for the nuclear medicine market, it's expected to be very strong. In fact, forecasts estimate up to $30 billion by 2031, 19% compound annual growth overall, with 30% associated with therapeutics. Rex mentioned this earlier, but this is due to lots of breakthroughs in interventional oncology therapies. This has led to an impressive influx of investment through capital markets and M&A activities. We completed the acquisition of the medical isotope assets in 2018. Same year, Bayer acquired Algeta. Shortly thereafter, Xofigo was approved. That same year, 2018, Novartis acquired AAA.
A few years later, they acquired Endocyte. Shortly thereafter, Pluvicto and Lutathera were approved. Boston Scientific acquired BTG in 2018. Shortly thereafter, TheraSphere was approved. Recently, the Novartis CEO discussed revenues for this year, forecasted to be over $1 billion for their nuclear medicine portfolio. Other recent activities: Lilly bought Point. Bristol-Myers bought RayzeBio. If history holds, further commercial approvals should be forthcoming. It's pretty exciting. Radiopharmaceuticals form a just-in-time supply chain. Our merchant supplier approach tucks in right nice. Specialty materials, typically hard to source ores like radium, thorium, yttrium, ytterbium, they're all processed and formatted for irradiation using either particle accelerators or nuclear reactors. The highly radioactive irradiated targets are then sent to specialty processing facilities using highly regulated packages. These facilities then format those targets into a concentrated active pharmaceutical ingredient.
And then the API is used by drug manufacturers to produce patient doses for diagnostic and therapeutic drugs. Depending on the drug specifics, this is either done at a specialty pharmacy or at a dedicated nuclear materials manufacturing facility like the one that we operate in Ottawa. This supply chain supports the drug innovators and the drug developers. You see that here shaded in gray. And this demonstrates our merchant supplier approach. Robb likes to call it our picks and shovels approach to support this industry supply chain. In this way, we have access to about a third of the total addressable market by revenue in this market. A visual representation of a radiopharmaceutical is shown here in the upper left. It's a radioisotope combined with a chemical like a ligand. That ligand will selectively bond to specific receptor molecules, say, on the surface of a tumor cell.
In this way, the ligand serves to seek out that expressed molecule on that tumor cell surface and position the isotope at that cell type of interest. Imaging and therapy are thus done at the cellular level and target just the cell type of interest. Our support of the nuclear medicine industry is to provide the capabilities in radioactive materials processing and manufacturing for novel approaches in producing specialty isotopes needed for both diagnostic and therapeutic drugs. It's also worth noting that many of the therapeutic drugs need a diagnostic pair, a so-called theranostic. In this theranostic example, our germanium-68 used in gallium generators and is often used in combination with new therapies like Lutathera or Pluvicto, lutetium-177 drugs.
Our licensed facilities have the needed regulatory approvals to receive, process, and deliver any of the radiochemicals currently being used in commercial or clinical trials, specialty materials used in high-consequence manufacturing with highly credentialed infrastructure and employees. It's recurring themes throughout BWXT. We've mentioned our pathways to profitable growth. Rex indicated this earlier, and he spoke about it last night on the earnings call. This includes expanding our base portfolio. We'll talk about technetium in a moment, but we also have this awesome portfolio of diagnostics. In fact, we're already making money here. We're seeing significant growth, double digits, year-over-year in these products. An example: Strontium-82. Strontium-82 is used in a rubidium generator. Bracco and Jubilant are our customers in North America. We also have European customers.
As rubidium generators are used in myocardial perfusion imaging studies, as that growth occurs, so is the growth in the sales of our active pharmaceutical ingredient. Similar example for germanium-68. As Lutathera and other markets grow, other lutetium-based products grow, we're seeing growth in that product as well. So we're very excited about the growth of our diagnostic portfolio, and we're looking forward to adding technetium to that portfolio, as Rex indicated, with the intent to commercialize this program and see approval this year. Technetium-99m is used in a variety of diagnostic procedures for cardiac, lung, and brain blood flow studies. Annually, diagnostic drugs using technetium account for about a well, well over millions of doses in medical procedures annually. In collaboration with our partners, Laurentis Energy and Ontario Power, our target delivery system has been irradiating molybdenum targets, supporting the development and testing of our technetium generator product.
Our production facility in Ottawa is fully operational. Our workforce is ready to begin commercial operations later this year as we anticipate FDA approval in 2024. It's a large market. Our disruptive technology will quickly capture market share. There are more than 100 therapeutic drugs being tested in clinical trials. Our merchant supplier approach allows us to partner with drug innovators and develop and supply the radioisotopes and API-grade radiochemicals the innovators need to run these clinical trials. This impressive, expansive pipeline of new drugs and new indications, as they're approved, there'll be a growing need for isotope production, radiochemical processing, contract manufacturing of finished drugs to support this commercial-scale pharmaceutical manufacturing. BWXT is well positioned to benefit from these new opportunities. Consider, for example, how BWXT supports Fusion. Fusion has a portfolio of drugs in clinical trials that use Actinium-225 as its therapeutic isotope.
BWXT provides not only actinium-225 but indium-111. Indium-111 is used by Fusion to determine what patients can enter into those clinical trials. We provide that to them, and then we provide the actinium-225 that Fusion is using to test those drugs out in those clinical trials. As Fusion is successful in the approval and commercialization of those drugs, BWXT will scale production of actinium-225 to continue to support their growing need. So I talked about this a little bit, but this slide is really meant to highlight how the supply chain works. Specialty materials in nuclear medicine include the hard-to-source ores I discussed earlier, radium, thorium, yttrium. These things are then formatted into targets. We're showing an example in the bottom right there. That's a target that goes into a cyclotron. We manufacture other targets that go into nuclear power reactors like the one in Darlington.
Once those targets are irradiated, they have to be shipped in these specialty packages to processing facilities that concentrate them into those active pharmaceutical ingredients, then finally format them into finished drugs that we then ship globally. Admiral McCoy spoke about this in his particular marketplace, but in this particular marketplace, these things work like this. They come to this facility in Ottawa on a Monday from a power reactor. We then process those things into a finished dose that we deliver that is administered to a patient on Thursday. It is a very difficult product to manufacture on a short timeline in very critical infrastructure. An example of that is TheraSphere that we manufacture on behalf of Boston Scientific, 90,000 sq ft of manufacturing capability there in Ottawa, automated production lines that we've been investing in since we acquired the assets.
We have a huge fleet of shipping containers that we can use to ship these things throughout the globe. We make thousands of patient treatments per year, sometimes multiple doses. In fact, we make 35 different dose sizes, enabling oncologists to tailor those treatments to those individual patients. As a consequence, Boston Scientific, their CEO, has spoken (this is a slide from their recent investor deck) about 10% compound annual growth in that product. That's for one indication, liver cancer. As new indications are approved, we expect to see growth in this product as well. Oh. Didn't want to skip Robb's slide. Maybe I should just let him talk to it. We ended 2023 with just over $70 million in revenue. It's up 25%. Rex spoke about this a moment ago.
We remain committed to our target for medical revenue of approximately $200 million in 2025 and EBITDA margins growing into the mid-30% range. There are three components to this growth. First, expand the base. This diagnostic portfolio I talked to you about, as well as the CDMO business, quite pleased with the progress that we're seeing there and the continued growth that we expect. Again, you heard last night that we expect this to see the continued growth 25% year-over-year like we saw last year. Second, therapeutics. We continue to support customers through clinical trials such as Bayer and Fusion with actinium. We have other products in the pipeline, lead-212 as an example. So continue to support customers.
But if you think back to that therapeutics slide, as drugs move through the clinical phases and become commercial, substantial runway for growth in selling active pharmaceutical ingredients or through securing new long-term CDMO contracts like with Boston Scientific. And then third, our technetium product. We remain on track for commercialization in 2024 and expect to grow and capture share as well. So overall, robust growth in this part of our business. We expect our EBITDA margins to ramp up from slightly positive last year, ultimately going in the mid-30% range as revenues trend higher. Finally, get to this slide.
Nuclear medicine is a large market. It's growing rapidly. Our corporate philosophy as a merchant supplier using specialty materials in high-consequence manufacturing positions us well in this market. As we help improve the way the pharmaceutical industry serves the patient, we are strategically positioned to achieve our forecasted growth. That's BWXT Medical. And with that, I'll turn it over to my friend and colleague, Robb LeMasters.
Thanks, Jonathan. You nailed that slide. You can have my job. Great. Well, my name is Robb LeMasters. I'm the Chief Financial Officer of BWX Technologies. I've been in that role since 2021, actually about a month before the last investor day, so hopefully, this event is as good as that one was. Before joining as the CFO, I was the Chief Strategy Officer. I came into the management team in 2020 to assume that role off the board of directors. I was actually representing an investment firm as a large shareholder for about five years on BWXT's board of directors. Okay. So to wrap up these setup presentations, I'm going to try to give you some important financial messages. I'm going to hope you walk away with five takeaways from my presentation.
First, we have a very stable outlook in general that's fueled by the naval propulsion business, but we're going to talk about several different call options that probably push the growth rate higher. Second, we have a highly visible set of attributes that are going to get us to a very visible high-mid- to high single-digit EBITDA growth rate. Third and fourth, we're focused not only on earnings but on cash flow. So we're going to be focused on operating cash flow and CapEx. We're going to talk to you about how that's going to generate an increased amount of free cash flow for our company. And then finally, if we generate that cash, I want to be very clear about what we're going to do with it, what our priorities are, and how we have a very shareholder-friendly capital return policy.
So before we get into the future, let me just talk about our past. I think it's quite impressive. When you look at our revenue growth over the past five years, we compounded at a 7% CAGR on the top line. In fact, as we announced last night, that growth even accelerated last year. We announced 12% growth for 2023 last night. On the adjusted EBITDA front, tracking quite nicely with revenue at a 5% CAGR. I note on the left, as many of our defense peers have also dealt with this issue, if you back out the FAS/CAS pension that runs through your EBITDA that went away for us over the past couple of years, that growth rate would be a 7% rate. So our revenue and our EBITDA are tracking quite nicely together. I think that's pretty impressive just to spend a minute on that.
We were able to stand up two completely new business lines during this period of time. So to have EBITDA tracking with revenue is pretty impressive when you think about standing up a nuclear medicine business and a microreactor franchise. Secondly, in this time, let's just be clear, it's quite a challenging period with COVID having impacts on our labor force. We did deal with production inefficiencies, so really matching up really nicely to have EBITDA line up with revenue at that steady clip. On the bottom are the elements of free cash flow. I would say this has taken a little longer than I had hoped to get ultimate success here, but we're seeing some good progress.
Last night, I think you guys saw that we reported $212 million of free cash flow against a $200 million target, the first time we, in fact, put out a target at the start of this year and beat it. You're seeing operating cash flow starting to trend nicely and CapEx to come down after we've had a couple of these CapEx campaigns. Still a work in progress here but getting close to a successful turn there. So how does that growth compare to some of our peers? I would just want to line up a couple of statistics for you because it's good on growth and operating performance, I believe. So when you look at revenue growth, we're a touch higher than some of our peers. I think that's because of the attributes around where we do our business.
So the parts of the defense that we're focused on are a little bit of the growthier aspects, the protected programs. And so we've been able to grow through what's been a little bit of a choppy time. We also have a couple of other growth drivers that we've talked about today that are, frankly, different than the defense market. They're acyclical drivers that are helping us to grind a little bit higher. On adjusted EBITDA, I think we've dealt with some of the same things that I think you're hearing from peers in terms of pressures on inflation, about different inefficiencies in production. And we've actually been able to overcome that. A lot of that's been some of the OpEx initiatives that we've been kind of doing behind the scenes as well as just generally leveraging SG&A down in the business.
So, pretty happy with that relative performance of profit. And then on the right, you can see that we do have a little bit higher EBITDA margins. I think we're known for the quality of our businesses. I think we get fair prices for what we deliver to the market. I think you've seen that in all the presentations today. And so we plan to have more strong margins than our peers given that competitive differentiation. So how are we stacking up in terms of capacity of our balance sheet? What can we do next? When you look at the cash plus the borrowing capacity, we have almost $650 million of capacity. This is probably the best our balance sheets looked. Have plenty of capacity to do M&A or to invest back in the business.
In terms of our net leverage, we've traditionally talked about a 2x to 3x targeted range for net leverage. As we just closed out the year last night, you'll see that we dipped below the midpoint. So we have ample room there. Frankly, I feel very comfortable running all the way up to three, if not over three times we find the right opportunity. In terms of the bottom right, you'll see that we're not laying awake at night worried about what our debt maturities are. Pretty far out, pretty staggered, have a lot of available capital. And so no matter what happens with the markets, we feel very comfortable. Let's talk about medium-term financial targets. Last investor day, we laid out 3-5-year targets. We're going to do the same thing here. We're going to use 2023 because we just reported that yesterday.
We'll use that as the base year in terms of this discussion out three to five years when we hope to hit these targets. So on revenue, that's a new metric for us that we'd like you guys to hold us accountable for. We're hoping to grow that at a mid-single-digit rate. We're hoping to grow adjusted EBITDA smidge higher at a mid- to high-single-digit rate, and then free cash flow even higher. So on the revenue growth, I think we've talked about several different business lines we have today. Yes, of course, the navy business is going to be steady for us, but it's those non-naval businesses that Kevin talked about, about the Special Materials business, about microreactors. We feel like those really could kick in during this period.
Commercial nuclear, I think that's obviously going to be a driver that's going to get us to that target. And then the medical growth is really going to come through nicely. We just reported over 25% last year. For 2024, we've talked about actually an acceleration even from that rate. So that'll be a nice tailwind for our business. Now, we will have to chew through the shipbuilding cadence we talked about in 2024 and 2025. We had talked about that investor day. I think we're actually successfully doing that in 2024, and we'll see about 2025. I think the jury's still out there, but hope to surprise you to the positive there. In terms of adjusted EBITDA, why will that grow a little bit faster than revenue? Let me just cover that. It's really two main reasons for that.
First, our Technical Services business, which are those sites, those are JV income. And that business is actually growing a touch faster for us. So you don't get revenue growth in that, but you do get the contribution of JV income. So that should be pretty obvious that you're going to get a little tick up there relative to just the normal revenue growth drivers I talked about. And then secondly, I mean, Commercial Nuclear is definitely going to be a good business for us. But the medical business, we've really stood that up with quite a bit of fixed costs, and we anticipate where that revenue is going to go. And so we think that's going to lever really nicely, not only the top line, but a bit of cost we're going to get leverage on, as Jonathan talked about and nailed his financial slide.
So on the free cash flow front, I think we'll just dive into that over the next couple of slides. It's really about the earnings growth coming through and then some initiatives we have on working capital and CapEx that we're going to do a double-click on here in 30 seconds. Let me pick out that middle statistic of EBITDA growth. We know that that's largely where you guys are focused on, and everything else kind of falls out from there. So let me build up to why we have so much conviction in growing at a mid- to high-single-digit rate. The underlying business we see is growing in kind of a 2.5%-4.0% rate. That's the shipbuilding part, which is the Columbia stacking up. We talked about that there's fixed costs there, but we're going to get some nice growth in Columbia.
That's going to be offset by the Ford-class. And ultimately, the Virginia-class is kind of a flat program for us. Then you have the other businesses outside of the naval business within the government. A business around Technical Services is going to grind nicely higher. The medical portfolio, specifically when I say medical, I'm thinking about the Nordion portfolio that Jonathan talked about, growing nicely before we get these other kickers that are in the incremental growth drivers bucket. And then our Commercial Nuclear business is going to be stable, servicing our customer over the next couple of years. On top of that, we think we've painted a pretty good picture for you as to why we're going to get another 2%-4% growth, principally from the medical business and from the non-naval side of the Government Operations business.
On medical, we will go commercial, we think, here this year. Depending on when we get it in the market, I think everybody knows that that'll dictate how we get on in 2025. There is a contracting cycle that happens in the autumn, so we'll see whether we can capture a big part of that as we roll into 2025. But ultimately, for 2026, we're going to really see that product come online. And then therapeutics. I talked about last night how the trials that we're involved with are smaller quantity. A lot of those patient populations are meaningfully smaller than commercial populations, and so that'll really lever nicely. And we'll see that in the 2026, 2027 time frame. And then, as I mentioned, the Government Operations segment really has a lot of exciting businesses in there.
If you think about the Special Materials stuff we talked about today, we're going to see some interesting RFP activity, we believe, over the next couple of years. That'll be a huge driver for us of incremental growth. Technical services business, Kevin talked about how our owner-operator mentality is really going to drive us to get more share there. And then we'll get a little sprinkling, we believe, of AUKUS and the microreactor franchise. I think around this time frame, we'll hopefully turn in from a prototype demonstration-type arrangement for us into ultimately LRIP, low-rate production. And then on top of that, one area that we've only assigned about 0.5% to, but I think could potentially have even more upside, is trying to outrun what we're seeing in the labor markets.
We think inflation of wages, we think finding workforce is going to be a challenge for us, and so we're going to have to overcome that. We have a lot of initiatives around digital, around operational equipment effectiveness. We stood up a new system, call it what we're calling the BWXT Business System, which involves nine metrics that we're going to track very closely. All of that, plus the playbook that I think a lot of the members here in the front two rows, they come with playbooks from their other companies, larger companies. We're going to deploy that into our company and just get more efficient. And so I think there's upside on this last bit of this equation. Okay, so let's talk about free cash flow, the topic I love talking about. So cash cycle days is how we internally talk about working capital.
Everybody tracks this differently on Wall Street, but we track cash cycle days. I've put the definition down there for you. We're in and around about a 60-day run rate right now. We hope to take one to two days out per year. So we'll be growing the business. So you have just the natural investment you're going to have in working capital, but I hope to offset that by some initiatives that we have. The biggest driver of this will be contracts in progress, improvement. So that's lining up milestones we have in our contracts, doing new contracts that line up very efficiently to what the milestones are, how we're going to bill for that, and how we're efficiently going to convert earnings into cash. That's the biggest contributor. And we have an unwind of one contract that everybody knows over the next couple of years.
That'll be a tailwind to that factor. And then on the accounts receivable and accounts payable front, this is just blocking and tackling. It's, frankly, collecting data and invoicing our customers more rapidly. We're doing several initiatives there. On the accounts payable front, we're standing up a new digital portal for some of our vendors to come through so we can kick out invoices where they're just not compliant so we can get more efficient on the accounts payable side. All these will lead to one to two days per year. Each day is about $7 million of free cash flow. So when you think about how we reported about $200 million yesterday, adding one to two days is like $7-$14 million.
You can see that you can pretty quickly get about 3%-6% from this factor alone toward our double-digit target of growing free cash flow. Now, the other side of free cash flow, as everybody knows, is the CapEx side. So I want to give you a little bit of an evolution. Several of our business leaders talked about sort of what the business was in the past, what they've been seeing more recently, and then the future states. So let me just walk through that with you guys on the CapEx front. I know a lot of people are focused on this. So a couple of years ago, when we went public or before we went public, we're really running the business on a maintenance level of CapEx. That really allowed you really only to grow at a low single-digit rate.
Then Rex talked about how post-2015, we really stood up as a public company. We said, "Where do we want to go?" And we did two significant capital campaigns that have now all but wound down. First, we went after a very new, exciting market, which was the nuclear medicine market. We spent over $300 million there. Secondly, we focused on being prepared for our naval customer. We anticipated the capacity expansion around Columbia and even the Virginia, right? We weren't sure whether people would want two or three of those or whether there'd be international growth. We want to make sure we got ahead of that. Frankly, that seems like it was a good decision. A lot of the shipyards now are chasing some of that CapEx. So we did that early in our cycle.
Now, more recently, we can regress now back down to sort of a maintenance level of CapEx and only spend on incremental growth projects. So we're kind of highlighting those in those green boxes there. We've been identifying, frankly, in this current period, really one key area that we're adding capital beyond maintenance. It's really around the microreactor effort. We showed that innovation campus. So we're spending money on the terrestrial side, standing up a capability that if we do get a bigger contract, we want to have that capacity. And then the space side, also, different manufacturing capabilities are required there, and so particularly around fuel. And so we've been expanding our capacity there. So those two have been generating a little bit more than maintenance CapEx, and we'll finish those off probably in the next sort of 2024.
As we look at the future state, we see much of the same, a maintenance CapEx model with select growth investments. I put that potential franchise building CapEx not to concern you, but just to say we haven't identified it yet, but we are an innovative company. If we find a franchise, we're probably more likely to spend more money on this than even M&A, right? So if we find an area we've proven in the past, we can spend on it. It does come with CapEx before you have earnings, unlike M&A, and so people need to be patient with us. So we have not identified that yet. We have ideas, and we would go after that. Other than that, we'll just be levering up beyond that maintenance CapEx area.
Several people in the crowd have asked, "Well, what does that mean in terms of what your CapEx is ultimately going to be over the next couple of years?" I think the way to think about this, just to conclude on a future state, is that every point beyond that 4% of maintenance CapEx, we've run it through the ROIC math and happy to walk you through that. You generally pick up another percent or so of incremental revenue growth. So going from 4%-5%, might pick up another percent over the medium term. So the way we're thinking about it is maintenance CapEx would generally give us about low single-digit. Maintenance CapEx is maintenance levels of growth. We actually, I think, over the near term could even grow low to mid-single digits on even maintenance CapEx because we've spent so strongly the past couple of years.
But as we move forward and we want to continue at a rate of mid- to high-single-digits, we want to add 1% or 2%. So if you had to hold me down, I would say we're probably going to keep seeing select growth investments, and we're going to be in that 4%-6% zone in order to continue to grow at a mid- to high-single-digit. But we're not going to spend inefficiently, and we're going to explain it to you guys when we spend above that maintenance level CapEx. We're going to identify the project, and I think you're going to be a buyer of it. Okay, so earnings growth, we've talked about working capital, we've talked about CapEx. When you swirl all that together, that's what ultimately allows you to see a pretty good picture on free cash flow.
We are an investment company, so it's going to be tough to reach the 100% just because we're growing so rapidly. But we've put out a new target for ourselves. As everybody knows, our old target was 85%. We're always raising the bar on ourselves, so we're going to raise it to 90%. We just actually put out a target yesterday that if you map it all through, it's an 80% conversion for 2024. So we'll still have some work to do over the next couple of years, but hopefully, I've given you the drivers that will ultimately get us there, and I'm confident we'll get there. Okay, so if we generate cash, what are we going to do with it? I think our history is very reflective of what you're going to see over the next couple of years.
Just to talk to you about what we've been doing, we've really been prioritizing organic investment, returning some capital to shareholders, as well as doing some tuck-in M&A. Over the past three years, we've generated $1.2 billion of operating cash flow. Half of that we've invested in the top bucket, about $650 million. About $550 of that $1.2 billion is in what we've returned to all of you, and we're going to stay committed to returning, as I said, greater than 50%. So we're going to continue that model. About half of that 50% actually comes from our dividend. So if you look at our dividend payout, it's about 25%-30%. Then we'll selectively buy back stock or distribute more cash in the form of dividends. Then finally, on strategic M&A, we're going to be extremely disciplined.
I'll cover that in a whole slide here next. I think we've proven that we've only done that in a very selective manner, and so we do have plenty of capacity to do that. We'll continue to look at that opportunity, but I think the top two are likely to be larger parts of our ultimate capital allocation in the immediate term. So strategic and financial criteria for M&A. So we can never time this. We have a very high bar. As I said, we're looking at a lot of stuff. We made a very successful acquisition over the past couple of years in the U.K. market that we're quite proud of. It was only a $50 million deal, but gives us real capability in Europe. And so if you look at that criteria, that's really hard to find.
Just like BWXT is a unique company, the type of M&A targets we're looking at are going to be hard to find. They need to come with just as strong positions in their market, unique IP, add to our growth profile, be creative. These are hard to find, but we will find them, and we have. I listed a couple. Everybody always asks me kind of where are you going to find these. We look for them principally in our core markets around the naval business. We are seeing some opportunities in Special Materials portfolio to find national franchises, national security materials. And then on the commercial front, we're spending a lot of time, given all that activity that John MacQuarrie talked about, we're looking for different manufacturing acquisitions there, and so we'll see where we go on that one.
Ultimately, we have sort of five takeaways as I started this presentation that I hope you take away. First, we have a highly visible top line, mid-single digit growth. We have several ways to win on EBITDA and margins, and so that'll tick along really nicely and add a premium, we believe, to revenue growth. We have a huge focus on cash flow, both working capital as well as converting what our earnings are. And if we're successful, we're going to generate cash. And so I hope I convinced you we have a very disciplined approach to that. And if we don't find good ways to invest that capital, we're happy to return that to shareholders.
We've proven that many times in terms of large share repurchases. And so we could do the simplest thing, which is just give it back to you guys, and you guys will do smart stuff with it. And with that, I'll ask Rex to come back up and conclude the presentation.
Thank you, Robb. I can finally retrieve my water. I started my presentation by asserting that we were capturing power and propulsion opportunities in all domains, and so this is a bit of a graphic about that. We've obviously been operating in the naval space for a long time, but now we're in space, and we're in the terrestrial domain as well. Obviously, a Commercial Nuclear fleet is terrestrial. But we're in some very interesting domains, but we're also in every position in the value chain. We go from microreactors all the way up to the largest commercial power reactors. We are the world's leading developer of microreactors. You heard John MacQuarrie talk about small modular reactors where we occupy the top position in the value chain by virtue of the fact that we have unique design capabilities, and we're the only manufacturer of large nuclear components in North America.
We have proprietary designs in some cases. We're the prime contractor on our Pele microreactor. So we occupy every position from the standpoint of energy output: microreactors, small modular reactors, large reactors as a component supplier, these very interesting end markets that I talked about earlier where we've got defense customers, space, clean energy, industrial, and now, of course, pharmaceutical in the past five years, and then every position in the value chain from prime contractor, developer, leading supplier, sole source for the Nuclear Navy, component and fuel supply, and contract manufacturing. And it's quite a robust portfolio of capabilities applied in all these different ways, and I think that's ultimately the value proposition for the company.
Then to wrap up, again, our investment thesis, I've talked about these broad secular themes that are underpinning growth in our markets: the great power competition that's sort of combined with energy security. There's a pairing there: decarbonization of the grid combined with the electrification of everything. There's a pairing there. And then this unusual and growing appetite that we see for nuclear in all these novel applications. I think those trends will be pushing these markets for a long time: decadal scale trends that we're seeing. We've talked about our scale and differentiation all day long, but let me just pound on that a little bit. Think about the following. We've delivered nearly 420 reactors to the Nuclear Navy, 420, over about a five decade period. And by the way, these are small modular reactors.
You build them in a plant, you put them on a train, you ship them out to the shipyards. People worry about whether the industrial base can do small modular reactors. There's an existence proof that we've delivered 400 such things. We've more than 400 of these. We've delivered 300 steam generators out of John MacQuarrie's business into the Commercial Nuclear power fleet, 300 steam generators. These things are enormous. You saw them on the page, but they barely fit into this conference room that we're in here. We are the only manufacturer of TRISO fuel at scale. This is the super safe coated fuel that everyone wants to use in these advanced reactors. People talk about it all the time. We're the only company that's actually doing it. We're the only commercial company that's providing Actinium to the radiopharmaceutical market as of right now.
There's about 20 of these only ones that I could list for you. And so when we say differentiated, when we say unique, those aren't throwaway words. They're very real in our case. And so that scale and differentiation really matters in these nuclear markets along with that history that we talked about. You've seen the management team on parade here today. Hopefully, you agree with me that they're the right team to deliver this exciting future that we have for the business. We have the right strategic positioning to win a lot of this future and an increasingly disciplined approach to how we allocate capital and how we run the businesses down and in and how we focus on our customers. And with that, we're going to take about a 10-minute break. You can get a cup of coffee, whatever you need to do.
We're going to set up for Q&A and then spend the balance of our time on Q&A. Thank you.
Okay. So we have plenty of time here for Q&A. Just a reminder, if you are online, feel free to submit questions through the portal. We'll try to get to them. We have a couple of people from the team here passing around mics, so we'll do our best to get to everybody. Maybe we'll start up here with Peter.
Yeah. Peter Arment with Baird. Thanks for all the details, everyone. Really, really helpful. I wanted to start with maybe Admiral McCoy. Thanks for all your years of service. But on the microreactor front, maybe it feels like BWXT's had a lot of these capabilities for a long time. Maybe just wondering why it took till only 2022 for the U.S. military to kind of pursue these initiatives because it seems like it's sort of a no-brainer the way you kind of explained it. And what does the tail look like afterwards after you deliver Project Pele?
Yeah. So maybe I'll start, Peter, and then pitch it over to Kevin. I think when you look at the nuclear capability that has existed inside the government, it's really Naval Reactors, which has its own regulatory apparatus, which has its own deep technical capability. That sort of capability does not generally exist across the government, with the one exception of the weapons side of it.
So I think as this new demand starts to precipitate around power and propulsion applications, for example, power-hungry radars and power-hungry directed energy weapons, I think the services started to look around for what solutions might exist. And that's what brought them to nuclear. And I think the reason it's been maybe a bit slow to evolve is that thing around sort of the infrastructural capability inside the services. In terms of where that could go in the long run, of course, we want to go to LRIP and low-rate initial production and ultimately into production programs to replicate the franchises we've said. But that takes some time to build up too. And then maybe you pitch it over to Kevin here on what the tail on Pele and DRACO could look like.
Yeah. Thank you, Rex. And Peter, thank you for the question. And also, before I answer the tail part, you say, "I think the advent of TRISO fuel and the development and the ability to make that at scale, which is inherently safer fuel, I think really facilitates being able to take some of these microreactors and put them in locations where you heretofore would not have thought about doing so." I also think that when you think about the tail, particularly for something like Pele, so I'll go put my old military hat on.
I certainly think the emergence of the great power competition, particularly with concerns about the behaviors of China and particularly in the Pacific region and a lot of those islands and remote places, I think that makes it ideal for the services to look at something like a Pele. And in my old job at NAVSEA, it was all about power. Particularly with the big radars, they're all power-hungry. The electrification of weapons, right? Rail guns, lasers, things like that. The ability to have those on some of these forward outposts where, take a place like Guam where all the fuel is trucked in, if you will, on a big seagoing fuel transport. The ability to have organic power for military applications, I think, is very attractive to the services.
Additionally, I think as we get more and more of the Pele-type units out there, I do think we'll be able to get the cost down and learn off that. We're seeing Joe Miller is in the room, but we recently got a cost-share contract with the state of Wyoming looking at the mining industry for remote power. We're talking to data center operators. We're talking to folks like Crowley and ExxonMobil about their applications. So I think Pele is an initial start. As I talked about, that's where the funding is. We like the ability to use cost-plus contracts with government funding to lower our risk on these first-of-kind but help us get our manufacturing processes down and help really get these microreactors to a point where they're very attractive to industry.
Great. Appreciate that. And just a quick follow-up, John, on the plant life extensions that are going on, it seems like Pickering's going to layer in nicely right after Bruce. But at the same time, during that same time period, it seems like the small modular reactor activity is going to continue to pick up. I was wondering how we should think about the ability from a CapEx perspective to kind of be able to handle both of those kind of requirements going through your factories.
Thanks. Yeah. Maybe I'll start, Peter. Sorry, I'm intercepting the questions here. I'll start there. Yeah. I think Robb will have something to say. You look at our capital profile and the maintenance level plus some selected growth areas that might push us up to that 5%-6% range. We've got a bit of a placeholder in there around Commercial Nuclear power capacity because we are filling up our shops. That shop in Cambridge is a beehive when you go in there. It's the feeders that are going into the Bruce side. It's the steam generators that are going over to Bruce. Ultimately, it'll be steam generators for Pickering and on and on, right? A reactor pressure vessel for GE. So we've got some needs there. We're carefully evaluating that, is what I'd say. Maybe over to Robbert or John for further comment on that.
Yeah. I might just offer that in the past, right, Peter, a couple of quarters ago, people said, "What would be the scope of the investment there?" So we are looking at our Cambridge site. What's convenient about that is we could just expand what already is an existing site and fill it in with Pickering work with the optionality as how we're designing that could have some SMR space. We're not going to need a huge amount of SMR space. So we can kind of build into that. When we're looking at other options, either buying manufacturing facilities or even looking at our competitors, a lot of them would have to build completely new greenfield space. You can imagine how that's pretty hard on a speculative basis. Not only build a shell, but outfit it with capital equipment, new people, training.
We can kind of just expand, if you will, John's facility. So Rex is right. When I gave the guidance yesterday for free cash flow, right, there was an embedded amount of CapEx, which was flat to down a little bit versus where we were in 2023. We're conceiving of a set of potential select growth investments because one of which would be the commercial. So we could live within that budget and ultimately probably achieve what we want on the commercial side in the near term.
We'll go over here to Mike.
Thanks. Mike Ciarmoli, Truist. Thanks for all the good detail today. Robb, I guess and I could always appreciate the conservatism, but just on the EBITDA CAGR, you did $470 million last year, $500 million guide this year. If I look just only at the medical business in that 25+ period, mid-30% margins, it seems like if that business scales alone, that should be enough to drop $60 million-$70 million of EBITDA alone and maybe get you 4.5-5 points of a CAGR through a two to seven time period. And again, conservative, are there other headwinds or thinking about Pele and DRACO? Do some of these programs continue to run at a cost-plus?
Or it seems like even as the SMRs are commercial, does that ramp up and drop a lot? It just seems again, I could appreciate the conservatism, but it seems like you've got good momentum on a lot of different products that aren't really accounted for in there.
Yeah. Thanks for the question. So we've put out a target in that time frame of kind of 2025, 2026 of $75 million. So if you just think about the math, 75 on 500 would get you a couple points, right, to your point. Now, we are having some pressure from what's going on in the Ford program specifically. We have two reactors on that platform, and we're stepping down. And they're bigger reactors. So that's a pretty big headwind that we were able to overcome in 2024. We have that same headwind in 2025. So it's a pretty meaty thing that's kind of going on underneath, and we're outgrowing it. I would also say there's different parts. We're talking about a lot of the growth in Technical Services and the Special Materials portfolio.
But you're going to have also churn out in terms of the Technical Services business, right? You can't win everything or retain everything. The downblending business has been a very profitable enterprise. If you go back to the Special Materials, that at some point will end. We believe enrichment will fill in behind it. But we just signed a contract, which we notified everybody about in the past week, that that now has been extended to 2027. But at 2027, we'll see whether we get one more extension.
They're just running out of material, if you will. So that's another one that's underneath the surface, a detriment to ultimately that $75 million. And so I think you're right that we have a lot of growth options. It's not conservative. I would hate to be giving conservative guidance. But I think it's guidance that we can hit, but definitely involves go get, right? Mid- to high-single-digit for a company like ours is already at $500 million. It's still go get.
Okay. Got it. And then maybe just a follow-up for Admiral McCoy, going back to Peter's question on the microreactors. Does that have applicability on Navy vessels as you look, certainly forward operating bases, removing that diesel supply chain? But do you see that in the near term being deployed on destroyers or other vessels for directed energy weapons or, like you said, power-hungry radar applications?
No, not at all. Not in the near term. Our existing ships have enough installed organic power to handle the weapons that they go to sea with.
Okay. We'll go Bob Labick over there in the middle. There we go.
Great. Thank you. It's Bob Labick from CJS Securities. Thanks for a terrific presentation today. Really appreciate everything you've shared with us. I wanted to stick with capital allocation for one more question and then a quick question at the end too. Just to confirm, I believe to hit your midterm targets, it doesn't require any CapEx materially over the 4%. We're not going to hold you to 4.0%, but in that 4% range and no incremental M&A to get to that, those would be upside to your midterm targets. Or are there any assumed incremental capital beyond that 4% maintenance? This is kind of part one of the capital question.
Yeah. So to deal with the two buckets, the easier one on M&A, no, we have not contemplated M&A. So that's an organic growth target. And then specifically, the way you framed the CapEx, just to be clear, only having maintenance CapEx, which would be a 4% rate, we said would probably get us normally maintenance CapEx. But because we've had I'm sorry, maintenance level of growth, which I interpret as sort of low single digit, right?
That's what maintenance means. Because we've spent so much money the past couple of years, what I said is we could probably achieve the guidance, the mid part of that guidance, if we just spent maintenance CapEx. But as we try to push toward the high mid to high single digits, I think it will require more than 4%. And I identified each percent above the 4%, call it 5%, 6%, would then drive us toward that higher end of that range. So to restate the answer to your question, I think it will demand in order to be in the upper end of that range somewhat more than maintenance CapEx, a 5% or 6% level of CapEx to sales to hit the higher end of the range.
Perfect. Thank you. And then you've talked about M&A almost a little more in the past than today. You laid out the criteria, and we understand why it's so difficult for you guys to find M&A that matches the business you already run and are growing. But if you put odds on it better than 50% or less than 50%, not trying to hold you to too much, would there be M&A over the next five-year period?
I'd take the over 50%. I mean, we've done M&A. We've done a handful of deals all in just to state them. They've all been $50 million was one that we did over the past couple of years, a $200 million deal in the nuclear medicine business, about the same size in the Commercial Nuclear. We bought GE Hitachi. So you can feel that they're all pretty bite-sized. I think we're postured to and there wasn't an intention of saying, "Hey, we're going to be on an M&A tear." It's just to say we are always looking there. And we have been successful at finding what I think are good tuck-ins. So I would take the over on that. I think our bar is high.
I think our balance sheet is the best it's been, as I said before. I think we have capability of financing at a better level than we ever have in the past. That's not to tell you I'm going to go announce a deal tomorrow. It's just to say we have the posture that can do it. And we're not going to throw Hail Marys here, right? We're going to do it within our markets. And I think every deal, I hope you would wake up and say, "That's a great deal.
That's better than even buying back my stock." I know everybody here loves BWXT. I could just buy back BWXT. So that's the threshold that we think about, and we try to clear that with M&A.
Super. Thank you.
All right. I'm going to come back to the audience. I'm just going to take a couple here from the internet just to be inclusive here. So you did 10% workforce growth in 2023, and you have pretty robust growth outlooks. We kind of hear about this from the peers on the pressure on hiring. Can you just talk about what's going on with hiring and kind of where you're going with that in the future?
Yeah. Let me start the answer to that question. And maybe we'll ask Bob Duffy to come up and talk about it a little bit. I think we said in the call last night that we grew we certainly said that we grew 12% overall last year at the revenue line and that we had added about 10% of our total workforce during the year last year in 2023. And so you can see there in that case that the growth is kind of following the revenue line. Ideally, your employee growth would be a little lower than your revenue growth because we're driving efficiencies into the business, automating more things, operational equipment effectiveness that Kevin talked about. But notionally speaking, that workforce growth needs to be approximately in line with revenue growth. And so as we grow, we certainly have got these workforce needs.
We think about it in terms of filling the bucket, the talent acquisition part of it, and making sure the bucket's not leaking too much, the talent retention part of it. We're looking for a variety of new sources for talent. Maybe toss it over to Bob Duffy to elaborate a little further on that.
Sure. You talked a lot about growth and very confident that we'll underpin that with the right people. We talked about redoing our talent acquisition process from open req to employee onboarding. It was just using basic operational excellence tools. Took a lot of waste out of there, tortured the details on a lot of our vendors from background checks to the clearance process. Going forward, the growth will be there. We continue to look for sources. You're going to see a big double down in our college and university recruiting, including intern conversion. It's something that hasn't been a big focus, but it will be.
We have over 100 people now in our leadership team dedicated to this process with executive champions across about 20 focus schools, some of the Historically Black universities and such. So lots of focus there. I think you'll see that as a big oxygen for us going forward.
Okay. Scott?
Hey, Scott Deuschle, Deutsche Bank. Jonathan, I was wondering if you could talk a little bit about the pricing power you see at BWXT Medical, particularly on the CDMO side. Thank you.
So I think the positioning in the value chain really is the thing that adds to our ability to price. So, radiation services, radiochemical processing, finished drug manufacturing, being able to do all of those different aspects of this allows us a significant amount of pricing capacity and pricing power. A lot of our peers don't have each of those different attributes. And the consequence of that end-to-end capacity really does benefit us. The other, I think, maybe difficult-to-explain attribute is taking the initial materials and processing them, formatting them for ir radiation. A lot of these things are toxic materials themselves. Radium is a great example. It off-gasses radon. So you have to be able to handle that inside a facility that's also going to take ir radiated radium and convert that into something.
So unique licenses are required for that initial component as well. So that end-to-end capability from stable isotope acquisition, formatting, radiation services, radiochemical processing, final manufacturing, that's power.
Are you typically the sole source supplier if you're a CDMO, like with Boston Scientific? And how high would those switching costs be if you were to exercise that pricing power more aggressively?
So just specific to TheraSphere, TheraSphere's 35 SKU. We're the only company on the planet that can do that. And so it'd be very difficult to pick that thing up and move that somewhere else. And the benefit of that is for the patient. So being able to tailor a dose for a specific individual and treat their liver cancer is very powerful for the oncologist. And so that ability to do that allows us unique positioning inside the CDMO space. And we're seeing that with other things. So our germanium-68 generator, for example, we individually dose that active pharmaceutical ingredient to fit into other people's generators.
So merchant supplier, we're supplying that to four different companies right now. So germanium-68's growing. It's because we can provide that in the necessary format for those individual companies to deliver it. I think we're going to see the same thing with our technetium generator, right? We can make it in a variety of different sizes. We can distribute it through our distribution network throughout North America. That gives us a differentiated approach to that product also. Again, going back to we're radiating that material with our partners, Laurentis, for ourselves, packaging it, and distributing it. So all of those things in combination put us in a pretty unique position in the value chain.
Thank you. And sorry, last question, but can you just clarify also what the FDA needs to see from you to approve commercialization on tech?
So we don't really disclose publicly what the FDA's expectations for us are, but I can say that we are working through with the irradiated materials that we have from OPG to finalize what's necessary to get that approval this year.
Yeah. I have one more to build on that you touched on this a little bit, Jonathan, but there's a question from the internet about Actinium and what our differentiators are as it relates to our production methodologies and kind of what the capacity is for us to produce Actinium as the demand ramps. Talk about the two paths, maybe?
Sure. So there are multiple ways that you can produce actinium-225. Our particular flavor, we're radiating a thorium-232 target on that world's largest cyclotron in Vancouver. But the byproduct of that irradiation is radium-225. So we can take radium-225 from those targets. We can extract it out of the thorium, highly concentrate it, and then, as it decays, get the actinium-225 off of it. You've heard Fusion say they signed a deal with us for a radium-225 Actinium generator. That's what that is. And so being able to separate that actinium-225 into cGMP active pharmaceutical ingredient-grade chemical allows folks like Bayer, Fusion, others to take that into human clinical trials. We're the only company that's doing that.
That particular method, that concentration of radium-225, works in other irradiation services modalities also. So North Star, they're going to take electrons fired at radium targets. They're going to need radium-225 separations into actinium-225. So there's a variety of different paths that we can get to radium-225 generators. Different methodologies take radium-226, put it in a cyclotron at 24 MeV, irradiate that radium-226, and then separate that out into actinium-225 directly.
You may have heard Eckert & Ziegler announce that they're manufacturing actinium-225. That's the method that they're using. It's very difficult, though, to separate the radium-225 or the radium-226 target material from the actinium-225. You need that radium-226 back. It's $3.2 million a gram on the market. So separating that technology out is difficult. We've cracked that nut too. So in either way in which you would manufacture actinium-225, thorium irradiations on a big cyclotron, radium-226 irradiations on a smaller cyclotron, TerraPower's taking thorium that decays into radium-225, that methodology, we know how to do that chemistry as well. So through a variety of partnerships and production methods, we have access to actinium-225. And we certainly expect to see our position in that marketplace grows as it grows.
Great. We have a question over here.
Yeah. My name is Richard Diamond, Castlewood Capital. I have a big picture question for the panel that I typically ask of management teams. And five years ago, I was in New York, and I was starting to worry about COVID. I wasn't worried about Russia invading Ukraine. I wasn't worried about the Houthis shutting down the Red Sea. But all of those events have impacted my portfolio. I find that I worry about the wrong things, and so do other investors. So for each of you, what are investors worried about your business that they really shouldn't be worried about? And what are investors not worried about your business that they should be worried about? Thank you.
That's quite a question. How long do you have? Yeah. So let me offer some context and maybe pitch it over to some of my team here. I would say if you think about those things like the global security risk that you just talked about, the Houthis and the Russian invasion of Ukraine and all that, there's a reasonable argument that that unstable situation actually benefits our business. And I made that case when I talked about the big secular trends. When you're worried about energy security and when you're worried about global security, you would tend to turn towards nuclear solutions. And so I think that instability is maybe a little bit of a tailwind for us, as regrettable as it may be. But I think that's beneficial to our business.
I'd say that I can tell you what I worry about in the business. We certainly have got avenues for growth, and we've got our own execution challenges as any growing company does. But we are handling special nuclear materials. In some cases, we're handling very hot irradiated nuclear medical materials. We have to be super careful about that. We have to stay within the regulatory framework. We have to manage our workforce as it relates to the exposure of those materials. So we're constantly vigilant about the management of our operations as it relates to the handling of the nuclear materials. We've got a very, very strong safety culture and world-class safety results.
But we worry about those things. Kevin worries about those things. If you look at our corporate enterprise risk management framework, nuclear criticality's right on that list. So that's what I worry about. And we give it a lot of attention and focus. I don't know that investors think much about nuclear materials risk, but we worry about it every day.
I mean, I guess I think on the worry side, I think the only one that comes to mind that investors I think are aware of, but we spend every day doing it. We try to spend a lot of time in this presentation talking about it. It's hard to do what we do and to deliver the margins that we do in our core business. That's what operational equipment effectiveness is about. That's what hiring people efficiently and paying them appropriately and getting price from our customer. That's spending an appropriate bit of capital. That's actually a reasonable level for all of you but provides a good workforce experience. And so doing the daily business of the naval propulsion side, I think hats off to Kevin, and that's what we try to display today. We have these pricing agreements. We have to work on it all the time.
We want to deliver against that. When you're a sole supplier, that's a hard thing to do. We try to work against already really good operational performance in the past. So we have to get better. That's what I worry about. But thank God he's doing it. So that's what we it's a really hard thing we do. And we'll continue to do it. So I don't think you should be overly worried about it but be worried about it. It's hard, hard. I think that's all. You want to do one, Kevin?
Yeah. I'll just comment. Yeah. Thanks for the question. So I don't worry about the fundamentals of the business. There's always the great power competition. And if you look at, so again, I'll put my old naval hat back on. Nuclear power is a game changer. It is just a game changer. It's here to stay. And it's what gives the United States of America the edge over every other potential adversary. So I don't worry about our position there. If you look at our services contract, that's all steady. There are cleanups and legacy things that we, the United States, have to deal with for well into the future.
I actually worry down a level. I worry, so my number one worry, believe it or not, when I come to work every day is a fatality. We do a very complex business. We're bringing 10% new people in. We have to do a very difficult job and do it safely. Our safety statistics are better than world-class for a manufacturing operation. But not only is our name attached to the product, but the Naval Nuclear Propulsion Program's name is attached to the product.
And so we have to be that much better and so working on it. The other thing I would say is we have a very smart customer. We have a very business-driven and a customer that is they are under at some level, we're all taxpayers, right? So our customer's under pricing pressure. And so we have to get better with each contract. And that's why we're really honing in on the business, squeezing more out of what we're doing, the operational equipment effectiveness. Almost 500 basis points improvement in efficiency last year is really to respond to the pressure and the expectations of our customer. And so it's that kind of thing that we're down in. And so kind of the drivers in the top-line business, I don't worry about.
I worry about the execution, particularly with new people coming into a complex business and making sure we don't have an untoward event. And then how do we squeeze more out of that business? And what's the next thing for us to go after? Every one of our manufacturing plants right now is under an intensive improvement program to squeeze more out of that. And you're starting to see that in some of the numbers.
Byron?
Sure. I guess this is Byron Callan, Capital Alpha Partners. Admiral, two questions for you and then a general question. When do you think you get more line of sight on AUKUS and how big that could be? Is it 2027? Is it beyond that? I know you can't talk about some of the specifics, but I'm just thinking about a timing when you could really frame it. That's one. Yeah.
I really don't want to get out ahead of the three governments. I would say there are three sovereign governments. All are on their own parliamentary and budgetary cycles that is driving some of this. And so we've had very specific conversations with our customer about potential scenarios and potential timings. And we've given them feedback on things that we would need in order to get started. That's all going through the hopper. And I really don't want to get out in front of the three governments.
Fine. The Navy, as you well know, tends to keep things longer in service than maybe had originally been planned. I think you cited a 33-year life on the Virginia-class reactors. Is there any optionality on extending or increasing the lifespan of those? And is that an opportunity for you guys?
Okay. So I'm going to put my old Navy Chief Engineer and Force Commander hat on. There's always those options. However, I will tell you, in that business, because we're talking deep-diving submarines and we're talking reactors, none of it is, "Well, we'll wing it for another two years or another four years or whatever." It all goes back to, "Okay. The last time we took hull valves out, how much wear did we see? And how much do we project? What about the tubes in this heat exchanger? What about the degradation, corrosion, and things like that?" So it's a very detailed, lengthy process based on engineering and hard facts in order to change the design basis of a fast attack from, say, 33 years to 35 years. And so those studies are done on a periodic basis as the need develops. And there's always that option.
We weren't planning to refuel the later 688 submarines. But our customer had a lot of forethought and built a couple of spare reactor cores. And we're, in fact, refueling some of the later 688 submarines. And those are happening now. So it's always an option, but it takes a lot of detailed analytics and rigor in order to get there.
Okay. And this may be a naive question on my part, but I think most of the uranium in the world comes from Kazakhstan, and it flows through Russia. Russia's a major producer itself. There's been talk about trying to at least rope Russia into some of these sanctions around uranium. Does that have any impact at all on your business, either positive or negative from a different fuel blend standpoint? Or throw that one out there, if you could.
So first off, let me talk about the government business. The materials that come through our plants come through on a towing arrangement, really. Even with a Category I license, we're not permitted to own high-enriched uranium. No one is. So the government has possession of that, and it moves through our plants and still belongs to the government as it rolls through. That comes from the stockpile. So there's no influence from Ukraine or anywhere else on that—sorry, Kazakhstan or anywhere else on that, Russia. In our commercial plants in Canada, that material, I believe, is mostly sourced from uranium mines in Canada that are owned by Cameco and perhaps others. So I don't see any influence at all on Russia, Kazakhstan, and others on our business. We're not sensitive to uranium commodity prices in any way whatsoever.
There's a couple of questions here. I guess sticking with kind of the high-level macro themes, there's a couple of questions here on government funding. They're asking about if you can update, basically, on what you see going on in D.C. around defense spending and just a little bit more color on how it does or doesn't impact BWXT.
Yeah. Let me we took that question last night on the call. I'll paint a broad picture and then hand it to Suzy Sterner, who runs the corporate affairs function, which includes our government relations office. First off, as a framing thing, there are parts of our business that are completely not dependent on U.S. government funding. Very obviously, the commercial businesses in Canada, Commercial Nuclear power, and our medical business are insensitive to it. We have one business in the U.K. that's largely insulated from U.S. government funding. And so we're talking about, obviously, clearly, most of Kevin's portfolio, which is sensitive to the appropriations cycle. And so with that, maybe pitch it over to Suzanne about where we are and what our general sensitivities to CRs are.
Sure. So first of all, anybody who wants to predict, you can also go predict the lottery numbers for tomorrow. And I'd like to hear your take on that. But first, be aware that the majority of our programs are multi-year funding. So while it's never a good idea for the United States to operate on continuing resolutions, we have a little bit of insensitivity to that. The area that sees the most sensitivity to something like a shutdown would be our services group because they're literally on site. And so when the funding runs out at the site, those folks are impacted.
If we're looking at FY 2024, as of this morning before I came in the door with the background chatter amongst staffers, is some optimism that we're going to get another punt. So a CR will be extended for the first 4 bills to March 8th and the next 8 bills to probably the 22nd. If something's changed the last hour, my phone's been upside down, so I don't know. But that's the current theory. I think that'll likely hold. A couple of dates to keep in mind: Super Tuesday, March 5th. You don't want to be in a shutdown with so many states going to the polls. And then the State of the Union is March 7th. Same thing. Optics are bad across the board if the government shut down while the president's in doing a State of the Union.
Also, a great opportunity for the president to massively attack House Republicans for shutting down the government in that situation. So cautious optimism there. Been in D.C. long enough. I think we'll get 2024 done rather than hopefully, not a year-long CR, but we'll get it done. As you know, the goalpost there is April 30. I'm sure you guys are following this. If we don't have it by April 30, 1% cut across the board, which Freedom Caucus desperately wants. So I think that's sort of the snapshot as the line in the sand today. Again, it's changing literally minute by minute. 30 years in the business, I've never seen it like this, so.
Suzanne, any views on the supplemental?
I was hoping you weren't going to ask me that. So the supplemental, which, as you know, when it passed the Senate, $95 billion. There's some critical funding in there for our partners, Ukraine and Israel, obviously. There's also $3.3 billion for submarine industrial base. We would love to see a part of that. That is the U.S. match to what the Australians have already put forward. I think it's worth pointing that out. Great bipartisan effort on the Senate. I'm hearing rumors of a discharge petition potentially in the House to get that to the floor. I don't see that happening until they figure out FY 2024. A discharge petition, for those of you who don't know, you have to have 218 members sign. It forces it to the floor.
You bypass rules. You bypass the Speaker. That will cause some consternation within both parties. There are Democrats who will not sign that because of the Israeli funding. There are Republicans who won't sign it for all variety of reasons. So because of that, I would be surprised if that moves until after FY24's done. But a little optimism there. All right?
Great. Back in the crowd, Tate. John, can you talk about the OPG life extension work? I don't think any of it is currently in backlog. And how about the cadence of the potential work? Would it be mostly in 2025 and 2026? And can you talk about that? Go ahead, John.
Yeah. So I think you're asking Tate specifically about the new life extension work because we have backlog for the existing. So as I said, OPG's announced that they're going to do four reactors at Pickering. That's not in backlog yet. But their goal is to get those refurbished and back onto the grid as soon as possible. So I would expect that we'll see contracts this year to design and manufacture components for that life extension. And that project will go for probably about eight years like we've seen these other life extension projects go. So it should have the same profile as what we've had in the past for life extension work.
Okay. And on the Darlington delivery system for Tc-99, is it active during the FDA approval process? And is it fully completed at this point too? So it's been operating. We commissioned it April of last year and operated it off and on over the course of well, it had to go through a commissioning phase. So only recently have we been getting targets out of it to use in our commercialization effort.
So that's been ongoing. It's our intent to have that fully operational in a commercial sense later this year upon FDA approval. So I think that's essentially where that system's at. It's four different elevators that are all operational there. We only needed one of them to do the work that we've been doing through the FDA technology development effort. And Rex, I think that's probably all I have to comment on that
Yeah. I would add maybe a note to what Jonathan just said, Tate. That asset, I think, is maybe a little underappreciated by our investors in the sense that it's a general-purpose asset for the medical business. Yes, we will irradiate moly material in there to make the Mo-99 that we put into our Tc generators. But any material that's amenable to neutron capture for medical purposes could be irradiated in that system. And this came up a little bit earlier. We can irradiate we can make lutetium-177 in that system. We can irradiate yttrium for the TheraSphere product in that system. So it's a very general-purpose and very big capability. There's nothing like it on Earth. And so that'll be a useful asset across certain aspects of that portfolio in the future in addition to the Tc-99.
Mariana? Mariana Perez Mora.
Oh, there. Mariana Perez Mora, Bank of America. First one on energy security. You mentioned Romania and Europe, right? But also, you mentioned international opportunities. Could you please discuss how is the nuclear position there particularly CANDU and SMR? And also, what is the competitive dynamics there?
So for the Romania market specifically, so they operate two CANDU reactors. That's their only reactors. And then they are reliant on fossil fuels for the rest of their power. So they've already decided that they want to stick with the CANDU technology. And they have two more. They've got a consortium of contractors, including a lot of Canadian content, that will be coming there. So it's not really a competitive dynamic for that technology because once you have a technology, there's a propensity to want to use that same technology.
As far as the rest of Europe goes for CANDU technology, that's the only place in Europe that has CANDU technology. But you asked about SMRs. And there's a lot of interest in the European market, I would say, for SMRs, as I indicated in my presentation. And I think there's a few technologies that are really kind of leading there. The one that's being selected for the Darlington work looks like it's got pretty good traction in a number of countries in Europe. There's a few others that are leading. So I think there's a competition there, for sure. But there's only a few that really appear to be in strong position to turn them into real operating reactors in the near future.
Are you agnostic to whoever of those technologies is more successful?
Yes, completely unaligned and able to support all of those. We've announced two. We're supporting some others with what we can do for them. That's our goal, is to serve that market without being aligned.
Perfect. Then on Special Materials, I was surprised to see it in the M&A target because considering your expertise, heritage, and customer intimacy, I could imagine most of those opportunities could come organically. So could you please discuss what are the main technologies, capabilities, customer access that you'll be looking at there? Yeah. So maybe I'll take that one.
And Kevin or Robb may have a comment they want to make. First off, in that category of Special Materials, historically, what we've done is special nuclear materials. And that generally means uranium enriched above 20%. And we're the only commercial entity that's permitted to handle those materials. And that's what's got us the Navy fuel franchise downblending uranium metal. But there are ways to extend that franchise along the nuclear axis, first off. And so this high-assay low-enriched uranium scrap work that we're doing fits within that regulatory framework. We're looking at HALEU deconversion as an opportunity. We wouldn't have to do that at a Category I site. We certainly could do that. And then there's this national security enrichment opportunity. There comes a point where there's enough pressure on the stockpile, particularly from naval nuclear propulsion uses, that it needs to be replenished.
That time is somewhere probably in the, it needs to start rebuilding in maybe the mid-2040s, which means if you're going to put enrichment capability, you need to start now-ish. So the National Nuclear Security Administration has an eye towards starting that. And we'd be, I believe, uniquely suited to do that work. So that's one way to think about it. We can build that whole line of business with an end cap being national security enrichment. That said, we have this capability. And Kevin used the term that this nuclear materials handling and accountability system that we have where we have to account for material down to the milligram level because it is national security material. And so that means you have to shake out the filters. And you have to find literally every milligram of that material. That's an interesting capability.
If you think more broadly about where that could go, maybe there are other Special Materials. Maybe there are chemicals. And maybe it's electrochemistry, other kinds of stuff that's used in power and propulsion that might have similar needs to it, exacting quality standards, security requirements, and things like that. And so there's a universe of things out there that are maybe not near adjacencies but probably the next ring over from the bullseye that are pretty interesting to us. And we have our eye on that. And that might fit in the Special Materials category but in the non-nuclear way. And I'm being pretty broad here. We don't have an acquisition target or anything. But it's the way we're thinking about how to extend that franchise.
Thank you.
Okay. I'm going to ask one more from online. And then I think we'll have time for maybe one more after that. We have about a few minutes left. So just you've had higher corporate costs over the last year. You've talked about digital being part of that. You talked about digital in the op excellence kind of stuff. Can you just kind of talk a little bit more about that and what kind of costs you have and what kind of strategies you're putting in place there?
Yeah. Let me start with that when I then hand it over to Omar Meguid, who is our Chief Digital Officer who's been in the business a little bit over a year now. So when you talk about when you think about continuous improvement in the business, we have this internal framework, this term that we use called the battle plan where we're growing the core business, finding adjacencies to invest in, and then driving business performance. We didn't talk about that here today. But driving business performance, which there's a number of different ways that you can do that. But continuous improvement is one of those ways. And so we had a number of discrete campaigns with a whole set of tools that go around them for how we drive improvement in the business.
Kevin talked at length about operational equipment effectiveness. But that's just one thing. Bob Duffy talked about re-engineering the talent acquisition process. That, at its heart, is a continual improvement process. Robb's been re-engineering how we deal with managed working capital. That's a continuous improvement process. So we have these discretely identified. One that was in that bucket of continuous improvement driving performance last year is digital transformation. It's a big, broad-sweeping term, frankly overused. It's a little bit of a throwaway. But we have specific discrete activities going on in the business to drive its performance and, in fact, three lines of effort in digital transformation. Maybe I'll pitch it over to Omar to talk about that. Then I've got some other thoughts on it too.
Sure. Thanks, Rex. Thanks. So we do have a very pragmatic digital program that is out there. It has really three components. One of them has to do with modernization of our infrastructure. Most of the infrastructure that exists at BWXT is kind of pre-digital age. We've already achieved a good milestone last months in connecting that infrastructure and bringing it to the outside world. The second one is around the integrations of BWXT, okay, the back office integration, which has to do with the margin expansion point. The reason is there are multiple parts of the business that have not been integrated before.
What we're doing is we're consolidating our back-end system so we can enjoy things that have already been enjoyed by a lot of different companies, like, for example, shared service or supply chain efficiency. That's a pretty kind of straightforward program. I've done that like 60x with a lot of the M&A program that I've been through. That program is well on our way. We have multiple iterations of it.
The third leg here is around applying the Industry 4.0 principle in our manufacturing facility so that we can grow the business. So things like IoT or sensors or some of what Kevin has talked about or scheduling optimizations, all of that kind of digital tools, we're going to put it in our manufacturing facility so we can grow our top line. So you can see the digital program is really aligned to what Rex and Robb were talking about. They want to grow top line. We want to expand our margin and get better cash flow.
Yeah. And maybe one other thing I'll add to it is people talk a lot about AI in the business. And we certainly have our eye on that. We have a data science group that works closely with Omar. And a couple of things I'll say about that. We have multiple examples in the business where we've used data science machine learning to improve operations. For example, we put a hyperspectral sensor on a weld process that was causing us a lot of heartburn over the years. And now, with the hyperspectral sensor combined with a machine learning algorithm, we figured out we can forecast when the weld's going to go out of spec and stop it.
And that saves us about $2 million a year in rework, by the way. And that's one of a half dozen examples I could cite. So we've been sort of quietly deploying machine learning, AI, in the business over the last half-decade or so. Generative AI is getting a ton of play. And there's a huge amount of interest in that. And we certainly are thinking about how we will deploy that technology within BWXT. But we're not doing much around generative AI yet. But we will.
Yeah. We will be very opportunistic. When the opportunity presents itself, we'll take advantage of the technology. And as I said, we connected our infrastructure to where it needs to be so we can leverage some of that advanced technology whenever the business needed, okay?
And we're going to do one more. And then we're going to wrap it up here. Any more? No? All right then. Well, thank you, everybody, for coming. We appreciate it. And I'll be talking to many of you soon, I'm sure. Thanks.