All right. Let's see if we get the deck up here. All right. Good morning, everybody. Thank you for coming. I'm Chase Jacobson. I'm the Vice President of Investor Relations and Strategic Finance here at BWXT. We're excited to have our 2026 Investor Day here at the NYSE. Thank you to those participating virtually as well. For those of you here in attendance, I think most of you have it, but you can access the presentation using the QR codes on the tables. You can take the little phone stand home as well. Remember, BWXT. It's also posted on the investor relations website. Quick safety note, for those in person, in the event of an emergency, please follow NYSE personnel to the exits. There's a staircase by the elevator banks from which you arrived.
During today's presentation, we'll discuss certain matters that constitute forward-looking statements that involve risks and uncertainties. Those are described here in the safe harbor slide. We'll also make reference to non-GAAP financial metrics, which are reconciled to GAAP measures in the appendix of the Investor Day presentation. Okay, for the agenda. The goal today is to give you an in-depth look at each of our businesses and insight into our many growth opportunities and how we're going to execute on that growth. We'll also be updating our medium-term financial targets. We'll start with a presentation from Rex Geveden, our CEO. He will provide an overview of BWXT and our strategy.
Then we'll move into Commercial Operations, where John MacQuarrie, President of that business, will talk about our super merchant supplier role in the commercial nuclear power market and the large growth potential that we see there. We'll then hear from Joe Miller, President of Government Operations, who will talk about our role providing nuclear solutions to some of our government's most critical missions. Then Mike Fitzgerald, our CFO, will discuss our financial strategy and our updated medium-term targets. Then Rex will come back with some closing remarks. We'll take a break at around 10:30 for about 10 minutes and then come back for a Q&A session, so please hold your questions until then. If you are participating online, you can submit a question at any time through the portal.
In addition to our presenters, we have a few other members of our executive team in attendance. A couple of them will come up for the Q&A session with the speakers. Before we begin, we're going to play a short video highlighting BWXT's role in delivering nuclear solutions to our customers' most important missions.
[Presentation]
All right. The "delivered" got cut off a little bit, but that's the key point here. With that, it's my pleasure to introduce Rex Geveden, our President and CEO.
Thank you, Chase, and welcome to everyone who joined us here at the historic New York Stock Exchange this morning and to everyone who's listening online. This is unequivocally one of the most exciting times in the history of this business as a standalone public company. I said probably similar words when I stood on this stage 32 months ago, and it was true then, and it's also true now. It's an increasingly exciting story. Throughout the morning, what we will do is give you an update on the state of the business.
We're going to talk about the incredibly robust demand environment that we see on both sides of the business, the commercial and the government side of the business, how we're positioned across the value chain to capture those opportunities and convert them into business, and then how we intend to execute on that business from the standpoint of operations and capital allocation. I'll start with this. We consider ourselves to be a global nuclear industrial champion. That may sound a little provocative or a little bit bold, but I think we'll make that case today when you think about it from a number of different dimensions, we'll validate that claim. If you look at it from the standpoint of revenue scale, we'll do $3.8 billion in sales this year. That's up 19% year-over-year.
That's also up from $2.7 billion when I last stood on this stage at the beginning of 2024. We've grown impressively. I think from the standpoint of sheer industrial scale, it's inarguable what a nuclear industrial champion we are, 5 million square feet of nuclear-qualified manufacturing space, and that's growing organically and inorganically. Our geographic footprint, certainly heavy in North America, now extending into Europe, and we have aspirations to do more there. Our exposure across the value chain, I think, is like no other company you will see, and we will talk to that. Also, our 70-year history, which was mentioned in the video. No one can make a similar claim. Then we have these 11,400 employees as it stands today, with incredible experiential qualifications, doing work that no one does across the nuclear space.
I'll also mention that we have, I think, a very compelling corporate vision, corporate purpose, which is deliver innovative nuclear solutions to create a better world. That's from the perspectives of delivering clean energy, providing for the nation's security, enabling the exploration and settlement of space, nuclear environmental restoration, great missions that our employees wake up to every day. So in reference to scale and geographic exposure, we have, at BWXT, 16 major manufacturing sites across North America and Europe. That compares, by the way, to six manufacturing sites when I came into this job over a decade ago. I mentioned the 5 million square feet of nuclear manufacturing space, and that's increasing by the day. We're completing a major expansion at our Cambridge plant under John MacQuarrie's leadership. We'll cut the ribbon on that one in about a month from now. Major capability.
It will lead to having the world's largest nuclear clean room. We also acquired a business called Precision Components Group, closed that acquisition a couple of months ago. That added about 10% to our capacity, 500,000 sq ft. Also, by the way, 500 nuclear-qualified employees. We've invested, since I came into this business, about $1.8 billion in CapEx in these facilities. That's probably a sliver compared to what we've invested historically. So the point there is from the standpoint of scale, we have capabilities, and from the standpoint of depth and unique capabilities in those facilities, it would be virtually impossible for a competitor to try to replicate what we have.
Now, looking at it from the standpoint, slicing at a different angle and looking at it from the standpoint of revenue by segment and product category, as the business stands today, it's about a 70% national security government business and about a 30% commercial business. That compares to about 80/20 five years ago, 80% government, 20% commercial. The commercial business is the fastest-growing. In fact, that business has grown from about $115 million at the time we spun this company out to about $1.1 billion today. Growing very fast organically and through acquisition. But the government business is also growing very impressively with new product categories, new domains of application, like in special materials, advanced reactors that we'll be talking about more today.
Now, slicing it by product category, the revenue by product category, a little bit less than 1/2 of our business is in naval nuclear propulsion, which has always been the heart of this business. The commercial power business, as I noted, is about 30% of it. Special materials is somewhere between 15% or 20%, but that one's super interesting because we've got some programs there in special materials that are becoming franchises for BWXT, things like high-purity depleted uranium, defense fuels, uranium metal, uranium oxides. We're doing things there that we're uniquely capable of doing by virtue of our licenses and credentials. We expect that to be a larger slice of the pie going forward. Of course, we're exposed to advanced nuclear. That's Kate Kelly's business. Kate's in the audience here today in the front.
That's the home for projects like Pele, the BWXT Advanced Nuclear Reactor, which is under the Janus program. That's where we manufacture TRISO fuel and do other national security programs. A very exciting business that's been growing. We expect to continue to grow. Then there's a little sliver of business there that you see called technical services. That's deceivingly small. I think most people in the room know that we don't consolidate revenue in that business because it's executed under joint venture limited liability companies with our partners. But we are operating at 14 major sites across North America, including now the Canadian Nuclear Laboratories. But we do defense work, we do environmental restoration in that business. But it moves the bottom line a lot.
It's an $80 million equity income business, and so a very exciting business that's grown quite dramatically over the last 10 years as well. It's not just about scale and geographic footprint. I mentioned earlier that we have some highly differentiating credentials and experiential qualifications, and that's what this chart speaks to. I'll mention again, and we say it often, and it has the merit of being true, that we're the only commercial business that possesses a Category 1 NRC license. That means we're permitted to handle special nuclear materials. Think of that as high-enriched uranium that's used in applications like naval nuclear propulsion. It requires a special license to do that.
So if you're a government customer that needs to do some special materials processing, and there is a lot of need for that these days, then your choices are to go to BWXT or go to a similarly qualified government facility. Those are the only two choices, and that's one of the reasons we've been able to, the special materials part of our business and others have expressed so strongly in the past few years, is because of that credential and the experiential qualifications that go with that. This chart will also show you how exposed we are to fuel. We have delivered 2 million fuel bundles to the Canadian nuclear power market. We are the sole provider for all the nuclear reactors that belong to Ontario Power Generation, and we've been delivering that fuel for decades.
We have delivered 9,000 fuel elements for research and test reactors, and of course, we're the sole source provider for naval nuclear fuel, which we've been doing for 70 years. This is, at its heart, really kind of a fuel business. Those credentials are the reasons why we can move into things like TRISO fuel production and advanced fuels for nuclear space. Those are the foundational credentials for that. We also have some unique commercial credentials. For example, we have delivered 325 steam generators to the commercial power market under John MacQuarrie's business, and there's 60 more in backlog. These steam generators are enormous. They're highly engineered, extremely complex products. There's only about two or three places in the world where you can get these products made, and we're absolutely the world leader in that. How are we doing as a business?
We did stand here 32 months ago in February of 2024 and laid out some medium-term targets at our last Investor Day. We defined those off the 2023 baseline, the 2023 fiscal year as the baseline, and we defined that as the three to five-year period following that. As we're standing here today and based on our 2026 forecast that we are reaffirming today, here's how we're doing. First off, we forecasted at that time mid-single-digit revenue CAGR. What we delivered is a 15% revenue CAGR, of which 8.5% is organic. Obviously, the rest of that is acquired revenue from some very high-quality businesses. We expected at the time to deliver mid to single-digit adjusted EBITDA CAGR. What we instead delivered was 12%, obviously well above target.
We did have some implied margin expansion in these numbers, and so we won't stick a spear in the ground on that one just yet. We have gone into some new businesses that have created some margin headwinds from a mix perspective. But we've got a very clear path to improving those margins over the next medium-term guidance, and you'll hear from Mike Fitzgerald, our CFO, about how we intend to do that and what the margins will look like in 2030, and they certainly will be substantially better than they are today. We forecasted double-digit free cash flow CAGR at the time, and we've delivered 18% instead. I think in just about every measure, we've blown out the last Investor Day targets that we gave you.
We're going to lay down some aggressive targets here again today, and we hope to stand in front of you in three or four years and tell you how we crushed those targets as well. When you think about it from the standpoint of strategic successes across the enterprise, I think there's a lot to say there. I'll mention a couple of these and then leave the rest of them to your consumption. But we have been working on sharpening the portfolio, enhancing the portfolio, and we've done that through both acquisitions and divestitures. On the acquisition side in the commercial business, we bought Precision Components Group, closed that a couple of months ago, as I mentioned. Also, we brought Kinectrics into the business about a year and a half ago, and that's been a tremendous success for us.
A nice growing business, highly differentiated, outperforming the business case for the acquisition. On the government side of the business, we acquired a business called AOT that got us into the high-purity depleted uranium business. Shortly after we acquired that business, in fact, nine months after we acquired that business, we won a $1.63 billion contract to deliver 2,000 metric tons of high-purity depleted uranium to the U.S. government. That gave us the full spectrum of uranium assays. So a highly strategic acquisition that one was. Then we announced that we are divesting our medical business, or at least most of it, for $800 million. We are keeping 20% of that business and riding along with what we think is a very interesting growth thesis for the business. That one's frankly better off in other hands.
The acquirer has a really serious plan for growing that into a global enterprise, and we're going to ride along with that. We like it. The reason that that was good for us is because that medical business, frankly, a couple of rings away from the bullseye, and now we have a business after the disposition of that asset that's completely focused on national security and clean commercial nuclear power. So we like what we've done there. I'll also mention that we've really grown our backlog. I'm going to come back to this in a future chart, but the backlog growth has gone from $4 billion when I was last on this stage to $8.4 billion. What's interesting about that is, of course, it gives you a sense of how we're converting opportunity into real business. That's one thing.
The other thing is it underscores the confidence that you should have in the targets that we're going to lay out here when Mike Fitzgerald takes the podium. Now we have a clear view about how we create value in the business, and it's depicted here in a pretty basic way, and the first is we want to participate in attractive end markets, and we absolutely do that. The national security market, the commercial power market, and the constituents that underlie those are very interesting markets right now. They're all growing, and again, it shows up in our backlog. So we want to be in great markets. We want to be in superior competitive positioning in those markets, and we certainly have made the case for that with our credentials, with our capabilities, with our depth, with our scale. We are winning.
We are winning at a very high rate, and you're seeing that in the backlog. Then, having captured business, it's all about how we execute and allocate capital. I've said since I came into this business as CEO that the job jar is pretty clear. What I'm supposed to do in this job is run the businesses so well so that they generate cash, and then take the capital that's created there and allocate it in such a way that you can optimize long-term shareholder value. That's basically it. Michael Ciarmoli heard me say that in the first month on the job on a roadshow to the West Coast. That's how I think about the business. Now, there's a bunch of other things I have to do. I have to build the organization. I have to communicate. I have to do Investor Days.
But that's how I think about it. And so operational excellence has been a focus for us from the beginning, and we're doubling down on that of late. We built a program, first under Bob Duffy's leadership and now with Suzanne Maddux, called Driving Performance Excellence, where we are applying the principles of a continuous improvement everywhere across the business. We're not only driving performance on the shop floor, which we've always been focused on, but we're driving performance in the non-operating elements of the business right now, and it's showing up impressively. It's showing up in terms of millions of dollars that are coming to the bottom line. You've seen our margins creep up throughout the year. Part of it is this Driving Performance Excellence. So we're focused on that.
We also created the position of Senior VP for Operations under Suzanne Maddux, a new position which creates a kind of a home room for operations. Then we're also putting tools, including AI tools, in the hands of our people so that we can optimize the performance of the organization with the use of empowering technology. Now, we said that we like to use nuclear to address some of the world's largest challenges. I've been saying publicly in a few fora and in interviews that I think BWXT uniquely sits at the Venn diagram intersection of economic and national and energy security. So why is this important for nuclear?
When you think about economic security. Let me back up and say, when you think about what has led to the buildup of demand and interest in nuclear, on the commercial side, it really started with clean energy, right, with the goal to decarbonize the grid, climate change related. That's been kind of a slow burn, frankly. I think we've been pounding the table around decarbonization for a long time. It didn't lead to business, frankly, because the business case still needed to close for nuclear utilities. So that was thing one. Thing two was the electrification of everything. We started to see more demand on the grid from the electrification of transportation and from industrial processes.
That created new demand signals, which is good for nuclear because for clean base load power, nuclear is increasingly seen as the solution for that, in addition to solar and wind, which are obviously variable power sources. Then I think the surprise demand signal came in November 2022 with the first release of ChatGPT. We didn't know it at the time how important that would be for power demand, but AI is an extremely power-consumptive technology. The incremental demand from AI right now is 60 GW. 60 GW. You think about that's the electrical output of 60 large nuclear power plants, and I don't see it slowing down anytime soon. Particularly that last element, AI, is thought to be probably a cornerstone of economic security. So leading nations like the U.S., like China and others, are trying to win at AI.
And winning at AI means winning at power, and winning at power probably means having a nuclear solution. So that is the economic security angle for nuclear and for BWXT. On the national security side, there are really three layers to the demand there. One is recapitalization of the nuclear as a global power and the need to sort of recreate that deterrence capability. Obviously, we are involved in the submarines and the aircraft carriers. We provide the fuel and the nuclear reactors. So a hugely important part of our business. The second part of that one, and we saw this a decade ago, and I think we were ahead of just about everybody else on it. We saw that the nation was going to need to rebuild its deterrence industrial base. It had literally fallen apart starting in the early 1990s. We stopped doing things like high-purity depleted uranium.
We stopped doing things like making high-enriched uranium. We shut down all that stuff and started cleaning it up, thinking we would never need it again. I do not know why we thought that, but we did. So the consequence of all that is this nuclear stockpile that we had of high-enriched uranium and other special materials that only BWXT can manage, can process, apart from the government. That stockpile is burning down. There is only so much high-enriched uranium. And by the way, we downblended some of it for non-proliferation. By the way, we downblended some of it for processing other materials and in some cases for doing things like the Pele reactor. So we are burning that stockpile down and somebody has to rebuild it, and we believe that will be us.
The third thing there in the national security stack of demand is the surprising demand, at least for me, of nuclear power and propulsion applications in other domains. So I talked about Pele and I talked about the BWXT Advanced Nuclear Reactor. Those are small microreactors that are used for things like powering military bases. We see the interest for space reactors for both power and propulsion. We know that cislunar space will become contested in the long run. We need nuclear solutions for the problems that are incipient in that domain. So those are the three things that are stacking up to create demand in the national security space. Then energy security. To me, this is a super interesting one here. This one started also in 1922— sorry, in 2022, not 1922.
That one also started in 2022 with the Russian invasion of Ukraine in February of that year. So we had Russian invasion of Ukraine, ChatGPT in the same year, both of them strongly influencing demand in nuclear. The Russian invasion of Ukraine alerted Europe, particularly, but the rest of the world, to the need for energy security. And nuclear shows up in that discussion because those nuclear assets are durable infrastructure that go on for decades, and they provide you energy diversity, and they provide you probably a hedge against fossil fuel price increases. So all of that has conspired to create a lot of interest and support for nuclear, and we see this as the beginning of a very long cycle of demand, a decadal type cycle of demand, and we sit here on the verge of that.
Now, I said earlier that we play across the full value chain in nuclear, and that goes all the way from the front end of the fuel cycle to disposal and management of complex nuclear waste streams. You look across that entire spectrum, enrichment, fuel production, special materials. Just about everywhere you look in the nuclear space, you will find BWXT. You will find, by the way, very few of our competitors. They tend to be in one place or another place. I have mentioned earlier that we have won a contract with the U.S. government to provide unobligated enriched material for nuclear fuel for national security purposes. I also mentioned earlier that that is a $1.5 billion contract, but that is just the tip of the spear.
The scope of that work is to take the technology out of Oak Ridge National Laboratory and industrialize it, and then to do the planning stages for the back end of high-enriched uranium. But what that leaves out is the middle assays. The high- assay, low- enriched uranium, the low-enriched uranium still has to be unobligated. Unobligated means that everything in that, and this is under treaty obligations through the United Nations, the Non-Proliferation Treaty. Unobligated means that it has to be U.S.-sourced from tip to tail. That means U.S.-mined uranium, U.S.-manufactured components, U.S.-wound fiber, or whatever it is. It all has to be U.S.-sourced. So that is not necessarily a commercial opportunity. It is a unique opportunity for the U.S. government. So that has to be done to reconstitute defense fuels capability for high-enriched uranium, and we have the scope for a couple of pieces of that.
When you fill the middle parts in, that is where you get into tens of billions of new opportunity that we hope to address. Joe Miller has got a chart on that, and he will talk more extensively about it. But staying in the realm of the front end of the fuel cycle, we produce all the Navy fuel. I mentioned that already. That is a special kind of unique fuel that no one else makes and no one else can make by virtue of not having the licenses or the technological know-how to do it. We make the CANDU fuel. I talked about that one earlier through John MacQuarrie's business, where we are the sole source provider for Ontario Power Generation, which has aspirations to build a lot of new large reactors, and we hope to make all the fuel for that.
Then, of course, we actually are the world's leading supplier of TRISO fuel. There are a lot of competitors out there, noisy competitors that are delivering very modest amounts of TRISO fuel. So we are the largest in that market. If you think about nuclear systems, again, we are the sole provider for naval reactors. We have probably the largest commercial components capability on Earth through our Commercial Operations business, and we are involved in multiple commercial reactors, various types, heavy water, light water reactors on all scales, grid scales, from small modular reactors to large reactors. Might have mentioned also our special materials portfolio, high- purity depleted uranium defense fuels, uranium oxide, and uranium metal that we are processing for the U.S. government.
And then we manage all of these sites for the Department of Energy and now for the Canadian government, doing management and operations of sites and environmental restoration. So we're all over the place and can't stop, won't stop is the message there. Now, back to this idea that we see ourselves as a global nuclear industrial champion. As I mentioned, you could slice that in a number of different ways to make that case. I don't think it's a hard case to make, frankly. But here's the case from the standpoint of nuclear-related revenues generated in public companies. And this is based off the 2025 results, but you can see here BWXT at about $3 billion last year. Our nuclear revenue for this year will be $3.7 billion of our $3.8 billion.
We've got a few non-nuclear things, not much, transmission and distribution stuff that we do and things like that. But we're sort of 98% nuclear. The next players would be in that $2 billion range, a couple of those, and then it drops off pretty quickly to $1 billion. I'm talking about nuclear-related revenues generated by the business. So in Curtiss-Wright, that would be one segment of their business as an example. And then it falls off pretty quickly from there. It's notable that there are public nuclear companies out there that are pre-revenue. So interestingly, the public capital markets have supplanted sort of private equity and venture capital in some ways for some nuclear startups. But that's the perspective from revenues and public companies that are nuclear-related. Now, I mentioned the backlog already, but I'll just show it here graphically.
Again, going from $4 billion in backlog when I was last standing here to $8.4 billion today. That, if you think about our current run rate, that's nine quarters of backlog, which again, I think highlights two important things here. One is our ability to take opportunities and convert those into real business. That's number one, and that's what you see there with the buildup of those revenues, particularly in the last couple of years, which have been very exciting for the business. And then the second, I think, notable point is it ought to give you confidence in the medium-term guidance that we're going to present to you today, because a bunch of this is in the backlog. Now, I mentioned my two jobs as a CEO to run the businesses, create the cash, and then to invest the capital to optimize long-term shareholder value.
And this is how we think about the allocation of capital, how we invest. And some of the investments that we make are pretty visible through our investor relations efforts. We talked about the expansion of our Cambridge facility, for example, to create the world's largest nuclear clean room and build some very much needed capacity there. The factory's absolutely jammed full right now, so there's no question that we needed that. We've talked about the advanced technology business, the BWXT Innovation Campus, which is the home of our advanced nuclear programs that belong to Kate Kelly. So we've made a number of those things public and visible, but we're investing in all these areas. We have really been investing in people. Gonzalo Cajade is sitting up front here.
He's our Chief Human Resources Officer, and we have just a talent campaign that's unbelievable, both at the top of the organization and building down through it. We're absolutely investing in processes. I talked about AI. I'll talk more about automation and digitalization of the business. We are investing in infrastructure across the board, trying to build this global scale of capacity. We're investing in digital transformation to lead to the end state of scalable growth, growth that we can manage and growth that makes sense for the company with our investments. We do that with certain investment criteria that are shown here on the right. I won't read through those other than to say this. I mentioned earlier that we've invested $1.8 billion in our facilities since I occupied the CEO seat. I am not reluctant to invest in the business.
I will say that I think that the investments that we're making in the business are always disciplined and are almost always bearing good fruit. Our acquisitions have been fantastic. Our human capital acquisitions have led to tremendous talent in the organization and in the edification of this performance culture that we have. I really like where we're putting our money, and I think it's showing up in our numbers and in our capabilities. To continue the discussion on automation and digitalization of the business, I talked about how AI impacts the business from the demand side, the power that AI is going to consume, and where nuclear would play a role in that. We're, of course, also thinking about how AI impacts the business from the standpoint of our operations.
We've had really three streams of effort going on in the digital world for a number of years now that are bearing fruit for the business. Number one is digital transformation. This is where we're upgrading the capabilities, the software capabilities, the core processes like finance, HR, payroll, all those sort of things, bringing those completely up to modern standards. We're going through a very aggressive campaign that we call the digital factory, where we are trying to automate literally everything, including doing things like in-situ inspections, having digital quality records for everything, digital twin representations for every component that we make, and we're making great strides there. We had to, right? Because our factories, in some cases, are not very young, and we needed to automate, update, digitize. Now we have some greenfield opportunities.
Joe Miller will talk about that when he does Government Operations. Greenfield opportunities to build some major new factories for high-purity depleted uranium, for manufacturing hundreds of thousands of centrifuges for the government. We'll have a greenfield opportunity there to automate everything and to take those lessons learned and reflect them back into the legacy industrial base. That's a huge thing for us right now. Then digital workplace. We are putting the latest digital tools into the hands of our engineers and scientists and workers. We're democratizing access to AI. The use cases are extraordinary. We've got one case where we figured out how to optimize radiochemical processing waste stream and have saved the government potentially $5 billion in so doing. By the way, speaking of which, we opened a BWXT digital center in Melbourne, Florida in February of this year. It's under Kurt Bender's leadership.
He's assembled a world-class team down there, which is the reason we built that down there. They were geographically kind of in that area. We have opened a new facility. You see it there. It's on the water, and that's where we'll have our February board meetings from now on as it happens. I want to talk about our leadership team here a little bit. These are the executive team members. I feel so supported, so edified, so empowered by this set of leaders, a number of whom are in the room here today. It's an incredible leadership team. It is certainly true that there are a number of new faces on here compared to when I last was on this stage. A lot of new faces. The reason for that, we're not suffering attrition at the executive level, voluntary attrition.
The reason for that is we needed to build the leadership team for the future of this business, which is bigger, stronger, more demanding, a higher performance culture. We have to build that, and we're trying to go and get Fortune 50 talent in places that we can get it. I frankly think that we're doing that. So incredibly powerful leadership team that are taking this company to the next stage of growth and capability. I'll stop here, and I certainly will return to the stage later to hammer this point home, but here's the investment thesis. First off, BWXT is everywhere across the nuclear value chain, but let me talk about the remarkable characteristics of this business.
When I interviewed for this job, to come into BWXT, first as the COO very briefly, and then CEO, I was interviewing with the executive chairman and the transitional CEO at the time. One of the first questions they asked me was, "It looks like you're in a great place over there at Teledyne, Rex. Why would you be interested in a business like BWXT?" Which by the way, was thought to be kind of a bond proxy, sleep-at-night opportunity, in all honesty. What I said was, "Look, what's not to like here? You have a core of incredibly powerful, sustainable, defensible businesses here with beautiful financial characteristics, cash generators, reliable businesses around naval nuclear propulsion , the components business, and the services business in the Canadian market under John's leadership at the time."
Then we had a technical services business that was at a little bit of a low point at the time, but looked like it could inflect up. My view of it was, look, you can go and get some of that cash and go and invest it and build some beautiful new businesses like advanced nuclear or special materials. We certainly made some investments in nuclear medicine, which have paid off for us. That story remains true today. Some of those businesses have migrated from new markets, new opportunities into the core. The core looks different than it did at the time, but it is still what it was then. It is a business that is set up with an incredibly robust set of core businesses that are utterly defensible, and then large growth opportunities on top of that.
We have a big growth opportunity in defense fuels, a big growth opportunity in high-purity depleted uranium. We have, I do not know how many microreactors we are going to deploy around planet Earth, but I think it will be a lot. But the biggest thing out there, in my perspective, is in commercial nuclear power. Now, it takes a long time for this to build. These are long-cycle businesses, and utilities kind of wring their hands around the business case and all of that, but large nuclear is coming. It is coming because of the conspiracy of forces that I talked about earlier.
We need clean power. We need to win at AI. We need to expand base load generation. We need to refurbish and rebuild all these old plants. Let me give you a sense of the scale here. In a three-decade period over the 1970s, 1980s, and 1990s, the global industrial base delivered about 600 large nuclear reactors, more or less in a three-decade period. You think about that is 15 or 20 new reactors a month delivered. A lot of those assets are still standing, still generating clean power. The economics are interesting around nuclear because certainly the capital cost up front, the capital cost and the cost of capital are daunting things for nuclear, but the fuel is cheap, and I think people do not get that. You can put a gigawatt of natural gas in, and the fuel costs are going to be $400 million a year.
By the way, those gas turbines are now, what, $3.5 billion or something like that for a gigawatt. So the price is going way up. By the way, the delivery timeline is now five or six years on those things, right? So nuclear is getting to be more competitive from that perspective. But nuclear fuel costs are going to be something like $60 million a year for a gigawatt. So when you look at it, if you are a patient investor, over the course of time, it becomes a cheaper asset to run. When you think about being able to extend the life of that plant by a factor of two for 30 cents on the dollar or whatever that is, those assets become incredibly powerful economic assets, incredibly stable base load power that utility customers need. So that is part of the growth story that we are planning for.
That is the reason we are expanding Cambridge. That is the reason why we are expanding into the U.S. That is the reason why we are interested in Europe, because we believe this uplift is going to come, and BWXT is going to be there when it happens. Thank you. With that, I am going to turn it over to John MacQuarrie to update us on Commercial Operations.
Thank you, Rex. Good morning, everyone. I'm John MacQuarrie. I'm President of Commercial Operations. I've been with the company for more than 28 years and in the nuclear industry for more than 30. I agree with Rex. This is by far the most exciting time that I have seen in my three decades in the industry. It's exciting because we're going through this really large growth cycle that looks like it's got a lot of potential to continue to grow at a very high rate. We're seeing demand for major life extension projects. For example, we're extending the life by 40 years, 14 reactors in Canada. That's more than 500 reactor years that we're adding to the life of those plants, which is just a lot of business in the future that we have good visible, predictable demand for.
We're also building the Western world's first SMR. It's under construction. We're making the reactor vessel for that. I'll tell you about that. It's a really fantastic project for us. Beyond that, we're involved in designing components for next-generation advanced reactors, and that's really interesting work. Designing components that operate at very high temperatures that don't use water as their coolant medium, they use liquid metal or molten salt. Maybe not all of those are going to make it to the market as a commercial product, but where we sit, we're involved in helping those technology providers to figure out how to do that, and that's great business for us. Some of them for sure will make it, and we'll be super well-positioned to support that.
The other thing that's really exciting is we're seeing this really great alignment between the electrical power industry and governments on the need for a lot more electricity and a lot more nuclear power, which is exciting. We haven't seen that for decades, of course. All of that is translating into really rapid growth for us and a solid pipeline unlike anything I have ever seen before. It's orders of magnitude more than what I've seen in our pipeline before in terms of components and services that we bid. That's exciting. Okay, want to start with some key messages about the commercial business. First, we built ourselves into a leading supplier of nuclear equipment and services, and we're investing to further expand that leading position to add capacity, to add capabilities across the value chain.
We've done this because we've got predictable demand from some of the things I just mentioned, from life extension work, from SMR work, from our recurring ongoing services that I'll tell you about. We've got this growing pipeline, as I said, that is unlike anything I've seen before for new build reactors in Canada and the U.S. and in Europe. That is really, really exciting. The combination of that, the robust backlog that we have, the bid pipeline that we have, support an outlook of strong double-digit earnings growth. Okay, so I've told you some key aspects of our business, but I want to talk about how the business has changed, especially recently. We've been in the nuclear business for six decades, really since the start of commercial nuclear generation.
But more recently, we have been working hard to evolve our business to meet the demand that we see coming, to be more capable, to be more global. We have done this because of the demand that we are already experiencing, but also because of the pipeline that we have good visibility to. If you look at this chart, back in 2020, our business had revenue of about $330 million. It was predominantly CANDU-focused, CANDU reactor-focused, and about half of that was making components. If you move forward three years into 2023, revenue increased nicely to $400 million. At this point, we are starting to see emerging demand for SMR opportunities. Now you come forward to 2026 to today, and the business has really transformed. It is $1.1 billion that we are expecting in revenue this year, and that does not include the medical business.
We have got a significant amount of services that are in our business. We have got a much broader customer base, so we have added a lot of customers in the U.S. and Europe, a much larger, as I said, service business, and more exposure to large-scale reactors and small modular reactors than we have ever had before. So over this time, we have gone from being primarily a CANDU-focused supplier to a global merchant supplier of equipment and services. Okay, so with all of that change, let me give you a sense of some of the key attributes of our business here, and some of them I have just mentioned. $1.2 billion in revenue this year. That includes about $130 million of medical in that number. As of the midpoint of this year, $1.6 billion in backlog. We have got more than 4,000 employees in the Commercial segment right now.
As Rex said, we have made more than 325 steam generators and delivered those to commercial customers around the world. We have got 60 in backlog working through our factories right now to add to that number over the next five years or so, and we will be booking more to add to that number of steam generators. Of course, we make a lot more than steam generators, all kinds of other components, but that is a real marquee product for us, a very complex type of product to make. We have made more than 2 million fuel assemblies for our Canadian customers, the CANDU customers, and that is just a steady, ongoing, very predictable demand for our business. We do have the largest heavy nuclear component manufacturing footprint in North America, and we are just expanding what is the largest clean room for assembly of nuclear components.
When you make a big nuclear component like a steam generator, you need to do that in a very controlled environment, and we have got, uniquely, the largest capability in the world to do that. The other thing I would like you to notice about the business is that it has really changed in terms of mix. Okay? We are about half services now, which is recurring business for us that is predictable, and it has got long-term visibility. So really, the message here is we are a merchant business. We have got significant industrial scale, and we have got strong recurring services. We did not arrive at this position by accident. We have been purposefully investing to build our business to meet the demand that we see coming, that we have really good visibility into.
So you can see on this chart, we added the fuel and fuel handling business that was GE Hitachi Nuclear Energy Canada in 2016. A little after that, we went and acquired a precision manufacturing business from Laker Energy . This is precision reactor components for the CANDU business. Then we realized because of the backlog that we were growing, we needed more capacity in our large component manufacturing plant in Cambridge, Ontario, and we began the expansion of that facility, and it is a significant expansion. So we are adding about 40% to the part of the factory where we make the really large, complex components, and we are just about finished that. Then we acquired Kinectrics, and that really, really transformed our engineering capabilities and our service business. Very large company, about 1,400 people, more than 800 engineers, and many technicians in that business.
It gave us real exposure to lifecycle services for fleets in Canada and around the world. Then just recently, we acquired Precision Components Group here in the U.S., and that established our U.S. commercial manufacturing footprint. It is a large and long operating business, so 500,000 sq ft of manufacturing space, more than 500 people in that business. They have been operating for many decades. They have done both commercial and government work, so they have got a lot of work right now for the Navy, related to things like missile tubes and to other components like steam condensers. But they have made a bunch of commercial product, and we are looking to leverage that to meet the coming commercial demand here, as well as continuing with the work that they are doing. Our strategy here has been consistent.
It is to add differentiated capabilities, it is to add capacity as we see that demand coming, and it is to expand geographically to get exposure to good markets like the U.S. and like Europe. Okay, so now I want to describe the breadth of our capabilities in this business that we have built. We have really got three lines of business in the commercial business. Heavy components, many of which we design. We have got a wide variety of services. You can see some of that in the center of this chart, and I will give you some additional information about that in a few minutes. Then we have got our fuel and our specialized equipment business, and we are the OEM of the on-power refueling system for the CANDU reactor. CANDU reactors are unique in the world. They do not shut down to be refueled.
They refuel while they operate, and it is a really complex system to do that. It works very well. It allows them to have the record in the world for the longest operating cycles. They can operate for more than and do operate for more than three years. So we are the OEM of that system. Okay, so, when you look across this breadth of what we do, it really gives us exposure for the entire value chain and throughout the entire life of nuclear plants. And that means we have got multiple touchpoints, both with reactor OEMs, but with power generators, right? Those are a major part of our customer base, and it allows us to participate in different ways. So in existing operation and maintenance, things like outage services, which is a very big part of our business, life extensions, and power uprates. Power uprates are interesting. Huge demand for power.
We're seeing a lot of operators in the U.S. that are looking to take their existing assets and just generate more power. The industry will add gigawatts. We do a lot of the engineering to support that, and of course, new builds. That's a description of our business. Now I'd like to talk about our demand outlook worldwide. The IAEA, the International Atomic Energy Agency, is forecasting global growth in nuclear capacity to more than double by 2060, and they're not alone in that. There are many different organizations that are predicting that kind of growth to meet the demand for electricity. We're seeing that opportunity develop across multiple reactor technologies and in multiple geographies. It's very widespread situation for us. For example, Westinghouse is reporting that they've got opportunities for 90 AP1000 large reactors globally.
In the case of the CANDU technology, Candu Energy, which is a division of AtkinsRéalis, is reporting that they've got opportunities for 14 new CANDU reactors, many of which are likely to be in the Canadian market. Then there's potentially hundreds of SMRs around the globe of different types, many of which we're involved in. What's driving this is increasingly clear. It's economic security. It's the need for, or the desire for decarbonization and the need for energy security. After more than 30 years in the industry, the magnitude of the opportunities we're seeing is unlike anything I've ever experienced before. Importantly for BWXT, this isn't concentrated on one type of technology or in one geography. It's varied and widespread, which is great for our merchant supplier business.
Canada is a very established market for us, and it's where demand is the most visible for us because we're so involved in and embedded in that market in very many ways. It's also a large market. Canada, if you think of it by nations that generate nuclear power, it's third on the list between North America and Europe, if you don't count Russia and Ukraine. So a good large market that's investing a lot in nuclear. In that market, we've got more than 1.2 million square feet of manufacturing and engineering space, a lot of differentiated space. We have extraordinarily long-term customer relationships, so more than six decades, actually. With the history of our company, we were involved before nuclear, and so we've got these really long-term relations where they know what we can do, they know our people, they know they can count on us.
We've also got rare fuel manufacturing capability and fuel handling technology. We're one of two fuel manufacturers, and we're the OEM of the on-power refueling systems. Now we've got very specialized plant services and engineering and licensing capabilities, some of which came with the Kinectrics acquisition. All of that gives us layers of demand in the market. First, we've got a solid foundation of recurring demand from the existing fleet in Canada for aftermarket components, parts, fuel, services, that we're seeing all the time and that's growing as the reactors age. Second, we've got major life extension programs, and this has been a really large, very good market. So right now, we're actively involved in supporting the life extension of the Bruce Power reactors and Ontario Power Generation's Pickering reactors. This is a CAD 50 billion Canadian market that we've been participating in.
It started in 2015, and it's going to continue all the way through 2032. Third, we've got SMR demand, active SMR projects. We're making the reactor pressure vessel for the BWRX-300 SMR that's being deployed at the Darlington site for Ontario Power Generation. It's GE Vernova Hitachi technology. Construction has started. We're deep into manufacturing the reactor vessel. That is the Western world's first SMR. OPG has committed to build four of those at that site. I'm highly confident they will do that. I want to give you a sense of what we're making. This reactor vessel is 600 tons. It's 100 ft long. It's, at its biggest diameter, 22 ft, roughly. It is the world's largest reactor vessel. You saw some of that perhaps in the video, although it was only briefly in that video. It's a remarkable vessel.
We are doing the detailed design of that and the analysis of that for our customer. Fourth, in Canada, we've got ramping demand for new large reactors. This is a massive opportunity that's coming towards us. My estimate is that that market is about CAD 120 billion- CAD 150 billion for the planned new builds in Canada. That's going to happen over the next couple of decades. Just going to go back and just spend one more minute on the Canadian market. I have to say, I'm very optimistic about the Canadian market. Canada just released its Nuclear Energy Strategy. It's one of the few countries in the world that has a Nuclear Energy Strategy. You may have read about that. You can look it up online, but here's a couple of key points about that.
The objective is to deploy 10 large reactors, want two under construction by 2035 and five more by 2040. Other elements that are key here are regulatory streamlining, which is critical. They've just introduced legislation, the federal government, about this, which is one project, one decision by one agency in one year. That's encouraging, and I believe that will happen. They want more SMRs. They want more off-grid generation for the Arctic, for the Canadian North, for the Northwest Territories. They need to make sure that we secure that land as a nation. There's considerable government funding incentives. For example, we take benefit from Clean Technology Manufacturing Investment Tax Credits that are 30% rate. We've also got reduced corporate taxes because they are very much encouraging us to invest to be able to meet the demand that's coming.
The market has, in general, structural changes driving increased electricity demand. It's got an established nuclear investment momentum and a very strong record of delivering these large, complex projects well. The Darlington Refurbishment has just been finished, four reactors, roughly CAD 13 billion, delivered on time and within budget. That gives investors confidence, and when you couple that with some other factors like government ownership of utilities or a regulated electricity market where it's normal to be able to collect from the rate base the cost of building new reactors, which is going on right now with these SMR new builds, you can attract financing at reasonable rates into that market. There's also strong interest in decarbonization in the Canadian market, not a lot of interest in building a lot of gas turbines for power generation, and multi-party government support for large, long-duration investments in energy infrastructure.
It's a pretty attractive market. In fact, we're already involved. We have contracts for licensing and project definition for these new large reactors, and we expect this will translate into orders for components before the end of this decade. Beyond Canada, we're positioning ourselves for significant growth in the U.S. and Europe. In the U.S., Precision Components Group that we've just acquired gives us an established large nuclear manufacturing footprint. It's at two sites in Pennsylvania and in New Jersey. The New Jersey site's on the Delaware. It's a fantastic site for transportation of large components, where you really need to be on a waterway where you can transport those components.
We're pursuing additional capacity for heavy nuclear components in the U.S. because we can see the demand coming from customers like Westinghouse or GE Vernova that need very large components, and we need to be able to meet that demand. We're working on that diligently right now. The Kinectrics acquisition gave us longstanding relationships with U.S. customers, particularly utilities. They've been in the market for decades doing engineer of choice kind of awards, so heavily embedded in that U.S. fleet. That gives us some really good visibility into what those customers are doing because, of course, that engineering happens at the front end of changes. As you know, and you can see on this chart, there's substantial U.S. government support for new reactors to be deployed. In Europe, at the bottom of the chart here, we're seeing a lot of activity.
We're already participating in the European market in various ways. We're designing the steam generators for the Rolls-Royce SMR. In fact, it's a large SMR. It's over 450 MW. That's in the U.K. We've got engineering services that we acquired through Kinectrics in several countries, so we're serving the installed fleet there. We're supporting AP1000 deployment through owner's engineer work in Bulgaria. The Bulgarian utility at what's called the Kozloduy site, where they operate a couple of reactors, are looking to deploy two large AP1000 reactors, and they selected us to leverage our expertise in what we know about this to help them to figure out how to deploy those reactors.
Based on our work that we're doing in Canada, we're really well-positioned to support the BWRX-300 deployment in Poland, in Central Europe, in Eastern Europe, and perhaps the U.K., as we've seen recently in the news there that there's a lot of activity going on there. Finally, there's a life extension project going on in Romania at the CANDU reactor there at what's called the Cernavodă site on the Danube River. We've got a pretty exciting pipeline for more components to supply two new reactors there, CANDU reactors at that site. There's two already operating. There's two that are partially built that they're now looking to complete, and they're already active in front-end engineering on that project. Just to step back from all this, our strategy is not to just export from Canada, which has been our traditional strong operating place.
We're building the geographic footprint to operate locally in these Western global markets, in the U.S., in Europe. I'd like to spend a little time on our service business because that's become a very large and very important part of our business, and it's an area where we see continued strong growth. If you look at the right-hand side of this chart, you can see service revenue has grown from about $70 million in 2020 to more than $600 million this year. Kinectrics is a significant part of that growth. It's a large service company. But if you exclude Kinectrics and look at our traditional BWXT services business, over that same period of time, it has grown a lot. In fact, it's nearly tripled. We're seeing tremendous growth in our service business.
What makes this service business attractive is that we can participate across the entire lifecycle of a nuclear plant. At the very beginning in licensing and owner's engineering, as I just described, we're doing that in Canada and Bulgaria, in other places, through operations and maintenance, doing lots of outage service work, plant modification work, supporting the aging of these reactors, and ultimately end of life and decommissioning. We have a significant role in designing the deep geological repository for the spent fuel in Canada, which is a very exciting project. And because nuclear plants operate for many decades, somewhat uniquely for power production technology, most of the plants operating today are expected to hit at least 80 years of life and probably go beyond that to 100 years of life.
That long operating cycle gives us really long-term customer relationships, recurring revenue, and visibility into demand long into the future for service work. Service has become a very important line of business for us. We see strong demand. We see continued growth, and in fact, we see some opportunities for inorganic continued growth in this area, and we're pursuing those opportunities now. Continuing on with services a bit more here. We know service is kind of a broad term. It can encompass a range of activities, obviously, and I've just told you about quite a breadth of services here. But to give you a better understanding, I wanted to describe an example of the service that we offer just to kind of give you a sense of what that looks like.
Picture a large CANDU reactor, and CANDU reactors are not a reactor that have a reactor vessel with all the fuel sitting inside it. It's a pressure tube reactor. It's got up to 500 pressure tubes. These are about 4 in diameter, about 30 ft long, and they are critical to the safe, reliable operation of that type of reactor. And what's key for the understanding the life of the reactor, because the life of the pressure tube is the life of the reactor in a CANDU reactor, is understanding how they pick up hydrogen from the water around them. That is the degradation mechanism, and it's well understood. It's well characterized. What plant operators need to know is how much hydrogen is there, because that equals the life of that reactor.
And there was some technology that was used in the market to try to do this, but the customer that we're working with said, "We need new technology. We need to get much more accurate here because we could be missing out on ability to operate these reactors longer without being able to characterize that hydrogen uptake." Kinectrics came up with a very innovative and proprietary solution for this. Designed new inspection equipment, and in fact, new sampling equipment where you deploy it into the core of the reactor in a very highly radioactive work environment, take small samples out of the pressure tube, and then we do laboratory analysis. We have these radioactive hot labs where we can do this analysis, determine hydrogen content, and then provided with our engineering team an assessment of the condition, the fitness for duty of those components, and the remaining life.
So we didn't just provide a piece of equipment, as you can see perhaps in this chart, but we provided a total solution end to end. So we designed all the equipment, including the delivery system to get that equipment into the reactor, then delivered all of that, and then did all the engineering to support that. This created very significant value for the initial customer and now other customers, because they can reliably say to a regulator, "I know what the condition of these pressure tubes are. I know how much longer I can operate." They extended life, which is tremendously valuable for them. So it's value for them, but for us, it created a differentiated service offering that is recurring as these reactors operate, and of course, it deepens our customer relationship substantially.
It's just one example of the types of services that we offer regularly in our business. So I hope that's helpful and gives you a bit of a sense of that. Okay, let me switch gears from services here, to our heavy component manufacturing design and manufacturing business. There's five things that I want you to know about this business. First, we're technology agnostic. We are not aligned with any one reactor technology. Other manufacturers are. They manufacture for their own reactor design. We're a merchant supplier. We support all. We work across light water reactors, heavy water reactors, boiling water reactors, and advanced reactors that don't even use water as their coolant. An example of that would be TerraPower, that uses a liquid metal sodium for cooling of their reactor. Second, we have industrial scale.
So as I've said, the largest nuclear component manufacturing footprint in North America, largest clean room for assembly of components in the world. Third, we have rare technical expertise. So, an aspect of our manufacturing business is that we are a very capable designer of components. Okay, and let me explain that in a couple of ways. So we design steam generators, perhaps in a pressurized water reactor, the most complex component to design. Very few organizations can do that globally. But we're also designing and doing the detailed analysis of the reactor vessel for the BWRX-300 SMR.
Increasingly, we're finding customers are coming to us as they're developing new technology, getting us involved early because of our design expertise to look at how to make components, material selection, et cetera, and how do you design that for manufacturability to make sure you can deliver with reasonable lead time with reasonable cost. A good example of this is TerraPower. TerraPower has a sodium fast reactor, of course, they call the Natrium reactor that they're deploying in Wyoming. They came to us early on and said, "We need you to look at designing these heat exchangers that sit in the core of that reactor." They're surrounded by liquid sodium, and actually it's sodium on both sides of that heat exchanger tube. It's a very high-temperature environment.
No reactors on a commercial scale operate with a high- temperature environment like that, which is challenging from a material selection and mechanical design of that heat exchanger. We've been designing that now for a while, making good progress and expecting to move to manufacturing stage. That's a big part of why we're getting involved early is our design expertise. Fourth, we've got a decades-long track record of delivery. Our customers know exactly what our track record is. They've seen us deliver those 325 steam generators and many other components, hundreds of heat exchangers and other components. Fifth, we have strong positioning in good markets, especially in Canada and the U.S. That's why we describe ourselves as a super merchant supplier of engineered nuclear equipment. Okay, continue with components here.
I've talked about our large market opportunity for components in our broad portfolio, but what I want to do now is quantify for you what a new reactor means financially for BWXT. By that I mean what's our addressable opportunity per reactor in revenue? It, of course, as you're probably not surprised, varies by the type of reactor. For a CANDU reactor, our addressable opportunity is between $350 million and $700 million per reactor of revenue, and that's the largest opportunity by reactor type that we have. We cover the full spectrum of everything. We can make everything in the core and everything around the core for a CANDU reactor. For an AP1000, it's a little smaller, so it's low hundreds of millions of revenue per reactor.
We can make all of the components, but we don't make things like the fuel handling system and some other systems, for example. That's a little bit lesser opportunity than a CANDU reactor. Of course, now we have legacy AP1000 content in our acquisition of PCG because in the first wave of AP1000 deployment, they made a variety of components for the U.S. plants and for the Chinese plants. Now turning to an SMR, there are addressable opportunities, about $50 million- $100 million per reactor. It varies, of course, based on the SMR type. Let me give you an example to illustrate that. For the BWRX-300, the GE Vernova Hitachi reactor, it's a boiling water reactor. It's got fewer components. The reactor vessel is where a lot happens, right? That's where they boil the water, that's where they control pressure.
There aren't steam generators. A bit smaller opportunity per reactor there, still very exciting opportunity. Then think of a Rolls-Royce SMR. That's a scaled-down SMR. It's about 470 MW. Of course, it's got steam generators. It generates steam with separate steam generators. It's got a pressurizer. It's got a variety of components. So that's a bigger opportunity for us per reactor. Now, on top of all the components work that we can supply, there's life- of- plant services which are not included in the numbers that I just gave you, and those go on for 80 or 100 years after these plants are built. The other important thing here to note is timing. These are very long- lead components, and our customers come to us very early, probably amongst the earliest in terms of suppliers that they talk to.
Sometimes we can get orders even before they've made a final investment decision because these are such long- lead components. Once they're awarded, we recognize revenue over several years depending on the type of reactor. I said earlier, our bid pipeline is unlike anything I've ever seen before. It's the strongest it's ever been, and we expect to start converting some of these opportunities into awards either later this year or early in 2027. Supporting these market-leading technologies isn't an aspiration for us. We're already involved, and we're involved and have been selected by them because of our industrial scale, our technical engineering expertise, and our track record for delivery. Let me give you some examples here. For CANDU, we're making 48 steam generators for Ontario Power Generation for the Pickering life extension project. That's four reactors that are being life extended.
For AP1000, we're providing owner's engineering service to a Bulgarian customer that I described earlier. For the BWRX-300, obviously, we're manufacturing the first reactor vessel for that first deployment. Mentioned that for Rolls-Royce SMR, we're designing their steam generators, and we expect to make those steam generators for the U.K. market. They've won and been selected in Sweden, and they've also gone into Czechia. We're participating across large and small reactors in North America, in Europe, and that's the diversified position that we've been building, which is enabled by our expertise and our ability to innovate. Of course, all this demand only matters if you can execute well, and we know this from our many years of operating. That's why operational excellence or our DPX program, as Rex described, is really critical to us.
Our focus is straightforward, improve factory flow continuously and eliminate waste relentlessly and automate repetitive work increasingly. We're doing all of that, and our objectives, of course, are to reduce lead time and cost and increase capacity and expand our margins. I hope this example on the right side of this chart maybe makes this tangible for you. For our current steam generator program that I mentioned, we're required to deliver one steam generator a month to our customer. But as soon as we got that contract, we focused on increasing that throughput significantly. We're now operating at a pace of over 1.5 steam generators a month in our factory, and that is really helping our customer. Just to give you a sense of scale here, these are 100-ton components. They're 50 ft long. They're 8 ft in diameter.
They're pretty large components with thousands of tubes inside them and a complex welded assembly. So significant effort to get to that kind of pace. By doing that, we've obviously benefited our customer, but we've increased our throughput, which gives us more capacity for the pipeline that we see. And it's an example of how operational excellence translates into growth and into margin improvement. Okay, so let me bring all these pieces together for you and talk about how we create value. Our position is built on three things here, a six-decade track record of solid execution performance, some deep and rare engineering technical capability, and unmatched industrial scale in North America.
Our strategy from here to create more value is to maintain our leading position in the CANDU market, in the Canadian market, and CANDU globally, expand our scope with other large OEM, reactor vendors, and SMR vendors, expand our industrial scale to meet that demand that we see coming, and to continue to grow our service offering in various ways because that's been great business for us, and use operational excellence to add capacity and improve margin as we go. So we're talking about taking what is a strong existing position and scaling it into a much larger, more global business. That brings us to the financial outlook for the Commercial segment. We've got a predictable core growth here, backlog of $1.6 million, as I said, ongoing life extension and SMR work, steady demand for aftermarket components and services. In addition, we have many new growth opportunities, very sizable.
So we've got large scale and SMR new builds in North America and Europe, expansion of our service offering driven by a growing fleet of aging reactors. Geographic expansion, we now have presence in the U.S. commercially into Europe, and further opportunity to grow with disciplined M&A. With that outlook, we expect to achieve high teens revenue CAGR over the period to 2030. And with volume increasing, pricing discipline, and operational excellence, we expect EBITDA margins to go from about 13% now into the high teens by 2030, with adjusted EBITDA CAGR greater than 20% over that period. Okay, I want to leave you with five key messages about our commercial business. First, we've built ourselves into a leading supplier of nuclear equipment and services. Second, we're continuing to invest to expand that leading position. Third, we have predictable demand from all the sources I just described to you.
And fourth, a growing pipeline, significantly growing pipeline for new nuclear opportunities in North America and Europe. And fifth, with our combination of strong backlog, good bid pipeline, it supports an outlook for strong double-digit earnings growth. Okay, so I'll wrap up with two points here. One, we've built a very differentiated commercial business over the last several years, and that has positioned us exceptionally well for the growth cycle ahead. So now I'd like to turn it over to Joe Miller, who will talk about our Government Operations business. Thank you.
All right. Good morning, everybody. I am Joe Miller, and appreciate all the commentary we heard from Rex so far with the strategy, the outlook, how we are currently executing across BWXT. John emphasized a lot of important points that I will also talk through, but I will talk about it very specific to how Government Operations has been constructed, how we operate every day, how we think about execution, continuous improvement, and how we are going to grow. You will see some parallels between what Rex talked about, what John talked about, but I will stay very focused on the government customers we have, that trusted relationship. We do have a commercial offering that I will talk about towards the end with mPower, with the Janus program, and how we are going to commercialize microreactors.
There is a lot of similarities, and those similarities are true because we talk very strategically within BWXT, and we have since 1867. We have talked about the importance of having a manufacturer's mindset in everything that we do. Even if it is a design, even if it is using AI and machine learning, it is all about manufacturing. It is all about delivering. It is all about staying very focused on what the customer needs, when they need it, and how we invest strategically to get there. I have been with the company for 15 years. I had my first exposure to BWXT on board a Los Angeles-class submarine, the USS Norfolk, and it is when I fell in love with nuclear. I did not know much about it until I joined the Navy. I was put into the nuclear pipeline, so I went to school for a couple of years.
I learned how to operate nuclear reactors, how to perform the sampling and analysis of water chemistry, how to go through the radiological controls and understand really important things like changing out the resin inside of a nuclear reactor, changing out the entire reactor itself, cutting the submarine in half, and doing all those high-consequence operations. That helped me understand how to perform in high-consequence environments. I decided to get my nuclear engineering degree and take my career to new levels in this role as Government Operations president. I took over for Admiral McCoy, who is now our chief nuclear officer and who is seconded to the U.S. Navy.
He works out of the Pentagon, but he spends all of his days in the shipyards, and he is doing that because we need to improve the speed of shipbuilding in the United States, and he is an integral part of that. The U.S. Navy is taking that very seriously. They are taking our reactor deliveries very seriously, and we are setting ourselves up for the future in how we build out our submarine fleet in the U.S. and how we work with some of our international partners that I will talk about later in the presentation. More specifically, inside of Government Operations, there are four business segments. We have naval propulsion, which is by far the largest in Government Operations and the company. It is about 50% of the total revenue of BWXT and 70% of Government Operations . We also have technical services. It is the most broad.
14 sites we manage and operate, nuclear laboratories, environmental remediation, and really revitalization of how we can use those facilities in the future, and a variety of other methods that we use as a company to go off and provide those technical services. Advanced nuclear, a business that Kate Kelly and I started back in 2017 and really became a formal organization in 2018, and how that organization is bringing new technology to life. All of the nuts and bolts of manufacturing and understanding how to operate nuclear reactors coupled with advanced design, advanced manufacturing, AI, and machine learning. We've been doing all of that since 2018, and I'll talk a lot about how those products are now coming to life. Then our next segment, our newest and fastest-growing, is special materials.
Now, we've been handling special materials for 70 years because you have to do that when you're building nuclear reactors, and the nuclear industry is 70 years old. We've been doing that ever since this company got into the nuclear industry. But as a separate segment, we saw this meaningful growth and these meaningful growth opportunities that were coming out of the U.S. government with a variety of new customers, especially in the advanced nuclear market. We addressed that. We formed a business just focused on that, and I'll talk about how that's manifesting in a couple big operations that we have in high-purity depleted uranium enrichment operations and how that couples back to our core businesses. The key tenets here of Government Operations are our foundation.
Our foundation is solid because we have unmatched experience in the way in which we operate our facilities, the way in which we manufacture each one of our products. We also have that foundation based on sole source contracts from the U.S. Navy. These are billions of dollars worth of contracts that allow us to deliver on multiple platforms, and I'll talk about what those platforms are, what the shipbuilding outlook is. But it's a solid foundation for us. It allows us to make strategic investments on how we think about that business, how we invest not just in infrastructure and technology, but also how we invest in people.
How we can lean into bringing people into the company, understanding, once again, how to manufacture, how to do things the right way, and then allow those people to move into some of our growth engines in technical services, special materials, and advanced nuclear. We have this predictable and growing revenue base, and I'll talk about where the growth is occurring. I'll also talk about how we're driving margin improvement out of that revenue base. Not only do we need to execute, but with this new infrastructure build-out that we've seen, and Rex talked about it, billions of dollars worth of CapEx and BWXT have been matched largely by our customers. Once we do that, once we build out those facilities, you need to optimize how you manufacture in those facilities.
As you optimize, you create efficiencies, and as we create efficiencies all day, every day, we are creating better margins for BWXT. So once again, the core capabilities you see here in the center, we have complex nuclear manufacturing capability with a proven safety record. That equals credibility, and credibility and trust is paramount inside of the nuclear industry. So we take that very seriously, and we keep that as part of our training programs, the way in which we operate, the way in which we communicate to all of our organizations. With that credibility comes deep government relationships, and that helps us, that has helped us establish this base. I talked about 70 years in nuclear, 70 years in the nuclear industry. For us, that started with Admiral Rickover.
He decided to take nuclear technology, convert that into nuclear reactors that could be used on submarines to create a strategic deterrent that would maintain peace worldwide. Very important that we did that after World War II because of what happened in World War II. How do we create machines for the Department of Defense to maintain peace worldwide for decades to come? That is why nuclear reactors exist on submarines. We continue to build those nuclear reactors with that same consequence, and we continue to do that for the U.S. Navy and a couple of other partners that, once again, I will talk about in later slides. That was in the 1950s. Then in the 1990s, the government decided to transition from government-owned, government-operated facilities to government-owned, commercially operated facilities, GOCOs.
Technical services were required, and most of the facilities, especially the ones that we address, have nuclear credentials and capabilities and material handling and control, all the things that we do and have been doing for several decades inside of BWXT. We brought those people into technical services. We started to understand more about how we could rapidly innovate in those operations across the United States and use the high-skilled capability and expertise throughout BWXT to bring on new contracts. On the left side, the established base, nuclear naval propulsion, 70 years ago. The technical services work, about 40 years ago, we have been working that. On the right side, how do we support our growth? Special materials and advanced nuclear. These are new businesses, but they have hundreds of millions and billions of dollars worth of contracts.
Special materials, like I mentioned, is born out of our naval propulsion business because of the handling and the requirements that go there. As we start to see this depletion of the stockpile that Rex talked about with highly enriched uranium, as we see the need to replenish a variety of other materials inside of the NNSA portion of the Department of Energy, we expanded that portfolio, and once again, we broke that business out to report separately directly to me. Advanced nuclear did start as a startup. We did that because we had an mPower program. That mPower program, which I will talk about, was shelved for very good financial reasons.
But we had this core capability and people that knew how to design advanced things and knew how to test advanced things, that knew how to utilize the newest technology to bring nuclear power projects to fruition. At that same time, we started to see from the U.S. government, especially from NASA and the space portions of the U.S. government, an extreme interest in high-performance propulsion, nuclear thermal in particular, in the 2017 timeframe. So we formed a business around that. We brought a dozen people together, that's now 400, and we brought those people together because we knew that power-dense systems in small packages could be of extreme value to the government market and eventually the commercial market. And I'll talk about how that growth out of advanced nuclear has come to fruition over the last couple of years.
Before that, I'll talk about just a high-level overview of Government Operations. Rex talked about the backlog at $8.4 billion. Almost $7 billion of that is in Government Operations because of our long- lead contracts, and that relates mostly to the shipbuilding industry, but it also relates back to technical services work that we're doing, some long leads that we're seeing across special materials as well. So overall revenue for Government Operations, $2.6 billion. One of my most proud parts of this slide is 425 reactors and counting. At least two a year, more like three a year, is what we're producing out of our facilities in Erwin, Tennessee, and Lynchburg, Virginia. But we're also producing all the components that go along with those reactors to translate the thermal energy from nuclear reactions to power and propulsion.
So we have 25 years of experience manufacturing advanced nuclear fuel, several decades beyond that for all different types of fuel, especially for the Naval Nuclear Propulsion Program. Also, Rex mentioned the Category 1 NRC license that we have. These are very unique. We are the only industry holder that has these licenses and has all the capability and the security and the protocols that go around each one of these licenses. And we do it with 6,000 employees inside of Government Operations . So those 6,000 employees wake up every day and they go into industrial settings and they build the most exquisite, the most robust nuclear machines on Earth. And they do it every day and they do it with passion, and they do it with a relentless pursuit, not just for quality, but also optimizing everything that they perform inside of those industrial settings.
The revenue layout here, and Rex talked about this as well, the naval nuclear propulsion, once again, 70% of Government Operations book-ended by technical services, which has very little revenue because we take an equity stake in joint ventures, 14 of them. We take that to the bottom line as equity income. We don't consolidate revenue at the top line. Special materials is growing fast, and I'll talk about both special materials and advanced nuclear in detail, and specifically what projects are bringing that revenue and growing that revenue over the next couple of years and into the future. So a lot of words on this slide. This is our business line overview. Once again, book-ended by our most mature parts of Government Operations with naval nuclear propulsion and technical services. And once again, you see a lot of customer overlap here.
In fact, even John and I have some customer overlap in Commercial Operations and Government Operations. But the customer overlap is one thing. We stay very focused on what our core capabilities are and how we can meet those customer demands. That is how we divide up what we are doing day in and day out. You see key customers in NNSA, obviously the Naval Nuclear Propulsion Program , the Department of War, Department of Energy. We have some work with DARPA. We have work with DIU. It is really across the entire spectrum of the government clients that are interested in nuclear. One new customer for us is AECL in Canada. We just won as the prime, a government operations technical services group, as a prime to manage and operate the Canadian Nuclear Laboratories.
Like John mentioned, it is a perfect time for us to have that relationship with the Canadian government because the Canadian government has taken nuclear very seriously. They have their own strategy, and they are doing a great thing in bringing that strategy to bear using this nuclear laboratory. We went across the nuclear value chain, and these are some of the high-level awards that we have received very recently. Over $6 billion worth of awards through our market basket contracts in naval nuclear. $3 billion in awards in just special materials alone. Those are just two separate awards, one at $1.5 billion and one at $1.63 billion. Then advanced nuclear. We have been able to translate all the institutional knowledge of Pele into a win on the Janus program.
Technical services, the awards that we have received there throughout the entire complex equate to about $4 billion in annual site funding. That is site funding, once again, that flows down through our P&L as equity income. I mentioned operational excellence. Both John and Rex talked about our DPX initiatives. These are broad initiatives that start off with a global look across BWXT. Where can we improve? How do we use the strength of BWXT to improve and increase our overall efficiency? The first thing for us is let us optimize our facilities. We can create capacity. We can do more in our existing footprint by optimizing those facilities. We can reduce waste through that optimization process, and we can use tools like automation and AI to maximize the output of each one of our operations. Automation and AI is really important to me.
I spent six years in the semiconductor industry, so I kind of saw the future before I joined a nuclear company again. In that future, we see that day in and day out in Commercial Operations and Government Operations. Using automation and AI also takes an extreme expertise because you can throw automation at a lot of problems that may not need it. Sometimes you just need the ability to use AI for QA inspections, for quality inspections. We understand because of our manufacturing expertise how to utilize technology that best fits the problem, not using technology to go search for problems. It is a nice way to integrate technology into our existing factories. Then as we ramp up in some of these greenfield sites, especially in enrichment, we are going to fully automate that factory because we have to make dozens, if not hundreds of centrifuges a day.
Much different than our normal delivery cadence. We will be using this in a variety of ways, but it is really important, and John and I tell our staff this all the time. We are going to apply technology where it matters the most, where we will get the most value, because we have to wake up every day and deliver and produce. We cannot stop production to start integrating technology. We have these maker spaces that are available to us to go off and test the technology and have a pragmatic way in which to implement that technology on the factory floor. You are seeing the increases in efficiency, especially from 2024. We have a 10% increase. From 2023 to 2026, it is a 7% increase in efficiency, and that is going to continue to grow. We have been making a lot of improvements.
We have been seeing the margin improvements come to the bottom line, but we are not stopping here. Across BWXT, we are the sole provider of nuclear reactors for both components and fuel. What you are seeing here is a diagram of an engine room. Starting with a nuclear reactor, the control rod drive mechanisms, the pressurizers, the steam generators, the fuel, a variety of other heat exchangers that go into this power plant inside of the engine room originate in our factories. They originate in our northern sites and our southern sites, really throughout the Eastern Seaboard of the United Staes. And so we manufacture these components for a variety of different classes of ships for the U.S. Navy. What you are seeing on the right side of the screen is the build time.
The size and the build time equate to how long does it take us to deliver each one of these ship sets. The Virginia-class submarine, the SSN-AUKUS program are equivalent, about the same. In the middle, you have the battleship and the Columbia-class submarine. On the right, you have the aircraft carriers. Now, the battleship, as proposed by the U.S. Navy, will use a Ford-class aircraft carrier. So it is the same components, it is the same reactor, but there is only one of them on a battleship, where there is two on the aircraft carrier. This graphic is to depict how long does it take to deliver the entire ship set. And that is relevant to our content in BWXT. We deliver more Virginia-class submarines than we do Columbia-class, more Columbia-class submarine cores than we do the Ford-class aircraft carrier reactors.
This is more on what that growth looks like and the visibility that we have into the 30-year shipbuilding plan. It is pretty steady state for Virginia-class, two a year for the next several decades. And we have hit that cadence, and this is where a lot of our efficiencies are coming in inside of the factory because we have been building Virginia-class now for quite a while, and we have gotten up to an operational cadence that makes a lot of sense. Now, the Navy will likely feather in the next- generation fast attack submarine reactor here, and that is up to them, and that will show up in the shipbuilding plan as that evolves from the Navy. Same goes with Columbia-class. Heavy deliveries. We have delivered the Columbia core.
We have many Columbia cores in production right now, and we expect that to continue pretty rapidly through the mid-2030s and then start to even out into the out years. Then the Ford-class aircraft carrier, we're continuing to build those as well. We have the battleship just shown here right now. This isn't in our forecast because the commitments and the purchases haven't come through from the Navy yet, but we do expect that to come through or at least give better visibility to that in the coming future. All in all, 4%-6% CAGR growth over this time period.
We see some upside here, and you see this blue shading at the top on the sand chart, and that shows up as battleship cores, the SSN-AUKUS program, which is a trilateral agreement between Australia, the United States, and the U.K., and then there's other international support, meaning when our allies need support on nuclear programs, especially nuclear programs specific to the shipbuilding industry, they'll come to the U.S. government who come directly to us. So we have a lot of interface in that regard, and we expect if there is an ally arrangement to provide this type of technology, BWXT will be there, and we'll leverage that opportunity for additional growth. I want to move over to technical services in a little more detail.
I mentioned the 14 programs where we provide services, and that's throughout the United States and now in Canada through the Canadian Nuclear Laboratories. There's a variety of sites listed here. Some of these sites are Department of Energy nuclear laboratories, where there's a lot of early science and development and some testing like you see out of Idaho National Laboratory, especially with some of the criticality experiments that we've seen in that lab. But we also work in places like Hanford and Savannah River, where we go through the restoration of those areas based on Manhattan Project operations that occurred there. We're going to restore those areas by cleaning up the tanks and preserving the environment surrounding each one of those tanks.
We also manage Pantex and other NNSA sites where we participate in joint ventures, making sure that the science is right and the equipment and the deliveries are right there, much like we do for the Naval Nuclear Propulsion Program. So there's low financial risk here because we're a management and operating contractor. We have GOCOs. We do invest capital, but that's part of the contractual relationship, and we get paid back in due course throughout the execution of those contracts. How do we build on this success? Only six years ago, 2020, this was a $27 million EBITDA business, and now we've grown it to $80 million. We've done that because we've been winning. We've been winning contracts in the variety of scope that's offered in GOCOs.
In fact, we've won just about every contract that we've bid over the last 5-10 years, and it started off with our initial bid in West Valley. We ramped that up across our Savannah River mission completion, which is the environmental remediation portion of the Savannah River site. Then we augmented that with Hanford tanks, and we continued to win with Pantex, Canadian Nuclear Laboratories, and we even won a contract that we used to participate on on the Strategic Petroleum Reserve. We used to operate a portion of those oil fields, and we're doing that as part of that joint venture. Then more recently, and some of the opportunities that we're seeing out of the government that are atypical is bidding individual pieces of scope from each one of those sites.
Meaning the Y-12 Complex has to build large facilities to manufacture products for NNSA, including lithium. They went out to bid. Normally, that would just be consolidated under that M&O contractor, but they went out to bid because they want this rapid growth in the footprint for NNSA, and we won one of the initial awards to go off and design that building, design the facility and operations, and really provide a good proposal back to NNSA for the full build-out to process lithium into the future. We're expanding here. We're using a variety of things. I talked about the people side of the business. We're utilizing the best in BWXT to go after these contracts. We're using a process that's tried and true, meaning teaming and teaming relationships that we know we can win with. Then we're using digital tools.
We manage these enormous projects in 14 sites. The best way to do that, the best way to streamline that, is to use artificial intelligence, and we've been employing that through each one of those sites. We've been integrating the way in which we're using AI with our customers, and they love it, right? They love the fact that we're moving faster than they've ever seen any contract could move before. That's the real reason we're winning, right? You can bid jobs all day long, but it's all about the CPARS scores as part of the FAR process. If you don't have good scores, you will not win. We've had good scores, and it's growing day in and day out or year after year. It's because we're moving faster than anybody, and we're doing it with extreme safety. I'm going to move over to advanced nuclear.
Like I mentioned, Kate Kelly, Erik Nygaard, several of us started this business in 2018. It was an exciting time because we did start to see this translation of new technology into the nuclear realm. We started to understand what does the customer base look for. First it was space nuclear reactors, then it was optimized nuclear fuel. In fact, we three-dimensionally printed HALEU fuel in 2019 as part of this business. It was one of our first projects. We did it because we wanted to prove to DARPA that we could not only rapidly innovate, but we could create a material composition of nuclear fuel that had never been done before. We could three-dimensionally print it. We could put it in a furnace that had hydrogen and 3,000 C temperatures, and it would perform mechanically. We did that in about a year.
It was an amazing feat for us. What we learned was that entire cycle was a brand-new business that had to understand how to hire right, how to create good program management, how to interface with new customers, how to develop a supply chain, and how to get things done quickly in a high-consequence environment, a nuclear laboratory. We did all that, and that was the springboard for all the rest of this growth. What we've done is we've hired 400 people. We did a lot of that during COVID. We had monthly all-hands meetings to make sure those people understood exactly why the strategy existed inside of BWXT to have a startup in a company that had been around since 1867. We built a 200,000 sq ft makerspace that has classified capability, and it's much more than a makerspace now.
First, it was a lot about development and seeing the designs come to life and component-type testing, but now we have a full-up reactor in there. We have the Pele reactor core with a core barrel installed, 7,000 components inside, flow sleeves ready to be fueled, ready to be shipped and fueled at the Idaho National Laboratory. So the transition has not only taken place inside of the nuclear industry, it's taken place inside of BWXT. We're designing our own products. We're manufacturing those with the latest technology. We're creating a digital representation of the as-built design, and we're going to be delivering this product and operate this reactor for the U.S. government here in short order. So out of that, we also learn how to go through the entire cycle of research and development.
That's the reason why Government Operations, advanced nuclear in particular, is the development engine for a lot of the new product lines that we have. Also, how do we optimize the TRISO manufacturing process? I'll talk more about that in a later slide. So I talked about the early part of this and why we built advanced nuclear platform the way that we did. Now we're getting into initial deployments. I would consider this the fun stuff, right? We've traversed this very difficult-to-traverse technology roadmap. The Technology Readiness Levels from 0 all the way to 7. We're there. We are now prototyping. We are going to deliver that first reactor. We have several other programs in the pipeline that I'll talk about in national security. Then we're going to scale production. Then we're going to expand the markets as we scale production.
We see that in context of what the government's looking for, how they think about microreactors, how they are thinking about distributed energy, how they are thinking about the tactical capability that goes along with a strategic product like a microreactor. In addition to that, we've been manufacturing fuel inside of Government Operations at our nuclear operations group in collaboration with our advanced nuclear group. So not only have we been manufacturing TRISO fuel for 20 years, we're the only ones delivering in-spec TRISO fuel to the government. Right? We're doing that in the hundreds of kilograms quantities, and we're going to get into larger quantities as that market demands it. But we're ready for that. We've been making investments, double-digit millions in just providing ourselves with more facilities, with more equipment to manufacture TRISO fuel. We've already delivered the Pele fuel. That was last year.
That Pele fuel will be inserted into the core that is in Lynchburg now in our facility. We delivered the fuel for Antares experiment. If you recall, earlier this year, or actually last year, there was a call to action by the White House to deliver critical reactors by July 4, 2026. That first criticality was Antares. That fuel came from our facilities in BWXT. It has been a great relationship. This is where we have a little bit of an intersection. They are a microreactor vendor. We are a microreactor vendor. We are providing them fuel. It is a true rising-tides-lift-all-boats situation. We are going to make fuel for everybody, whether they are our competitors or whether it is us. We do that because we need this TRISO market to expand.
We need the volume to increase so we can reduce the cost, so microreactors can become a technology and create a new market for off-grid and behind-the-meter type applications. Back to what we use in our capabilities and how we are using TRISO fuel to not only create Project Pele, and this is a project that has been running since 2020, but we had another project running in parallel to that through the Department of Energy advanced nuclear campaign, and that project for us was called the BWXT Advanced Nuclear Reactor or BANR. Just like Project Pele, we started this program in 2020. We were highly focused on how do you commercialize a Pele reactor? How do you use Pele reactors or microreactors in a variety of different ways? It started off with an oil and gas company.
Paid us $250,000 to write them a proposal on how we could deploy these reactors in an oil field. We have taken that thesis, we put that into a program under the Department of Energy, and we not only understand how this reactor needs to be scaled up from Pele, but we also understand the key tenets of supply chain delivery, program management. We are the prime for Pele, meaning we have Northrop Grumman and Rolls-Royce LibertyWorks working for us as subcontractors. We know how to create big programs with new technology, and we are going to deploy it for the Janus program at Fort Campbell. In addition to that, we will have a commercial offering as the same BANR reactor that will deploy CONUS at a military installation, and that commercial offering will have a lot of uptake as we predict here in the near future.
Moving on to something that I see as the next generation of, the next wave of technologies born out of our advanced nuclear segment. It is really three different categories. Strategic deterrent modernization, just like it sounds. There needs to be a modernization of what we are delivering for the strategic deterrent. High-precision manufacturing is absolutely required. High-precision manufacturing in classified environments, very, very important. That is what BWXT does. We do it for nuclear products. We can do it for mechanical systems for this customer as well. Operational energy, it is really deploying what we see in Pele, what we see in Janus, and in creating an operational energy case around that microreactor product. Space operations. I mentioned high power- dense systems and very small packages are a very unique offering that BWXT can provide. Space operations needs that. Volume and mass are absolutely important in space operations.
If you can get a power density well beyond solar, which nuclear absolutely provides, then space operations is going to be an emerging and ramping segment for us. We'll talk more about that as those products and as those programs continue to mature. Moving over to mPower. This is the reason I joined BWXT. Back in 2011, I was very excited about small modular reactors. I was very excited about BWXT and what we could bring to the marketplace. This program started in 2007, 2008, and we really ramped up about 2010, maybe 2011. We had a couple of things that were happening simultaneous. We were designing the reactor. The components that were most mature, we were building and we were testing.
We also had a large thermal hydraulic test facility that I managed and operated to understand the dynamics of an integral vessel once- through steam generator coupled to a nuclear reactor. We went through a lot of the design basis events and scenarios that are required to analyze this technology. It became very mature, but the economics weren't right. The demand signal wasn't there. The financial case no longer made sense. In the 2014, 2015 timeframe, we shelved it, and we shelved it for very good reasons, but we preserved all the information that went along with mPower. We did that because we knew that it may reemerge. We may have an investment scenario in the future where BWXT would pick it up. Or in this case, and what we're doing, where two other companies would be interested in it.
The two companies are Applied Atomics. We've licensed them this technology. We have an agreement with them to commercialize mPower for the commercial market, terrestrial in particular. CORE POWER , they're interested in marinizing the mPower reactor. Essentially putting multiple units on an enormous barge and then allowing that to provide power to the shore. This is interesting for us because now we can monetize all that investment that we made at mPower. Furthermore, we stay true to what John MacQuarrie talked about. We will maintain our existence as a supplier, a super merchant supplier to the small modular reactor community because we will build what they design. They're going to continue the design. They will continue the licensing.
We will provide services to make that real, and then most of the scope will go into John's factories in Commercial Operations as they continue to advance the product. We'll retain the IP, we'll retain the exclusive rights to manufacture. These two companies will take this from where we left off and fully commercialize. It's good to have two companies doing that because they can share their resources, and they're in constant contact. They see this as a strategic benefit to have each other. It's not a competitive context, and I think that gives even more life to this program as they continue to invest. Moving over to special materials, we do have these differentiated capabilities, and I talked about that in some level of detail, but it started off with a variety of defense fuels.
It started off with our work with the national labs about 25 years ago in scaling up TRISO manufacturing. Then it equates to how can BWXT serve the government clients? We started with, we have this HEU stockpile. It will extend into the 2040s and maybe into the early 2050s. Where does that supply go? Some of it goes into naval reactors, some of it gets down-blended for use for things like tritium production. We have been performing those over time, and we kept that as part of our core business. But where we branched out was when we saw high-purity depleted uranium enrichment operations become big businesses. That is how we coalesced around what we already had strategically and how we could form and create and solidify new opportunities on that established base. You are seeing the variety of enrichments here on the right.
It starts with depleted uranium. There are things called tails. It is essentially the excess from the gaseous diffusion enrichment process that was performed in Portsmouth and in Paducah. Those tails have been maintained, and now we take those tails, we create depleted uranium for a variety of uses for the government. We also see an enrichment capability that I will talk about here on later slides through LEU, HALEU, and HEU. But right now, we are contracted for HEU. Taking HALEU, enriching to HEU, allowing us to not only replenish the stockpile but maintain a constant inventory for the U.S. government. We are seeing growth here, large growth, 24% CAGR, and we are seeing continued growth into 2030. More about high-purity depleted uranium. This is a great story because we quickly translated inorganic growth to organic growth. We acquired a company, Aerojet Ordnance Tennessee.
We acquired that in January of last year, and it was, once again, an extension of our capabilities in material handling. From there, we had almost immediate interest from the NNSA customer. They were excited about the fact that BWXT, a large company that could handle large programs, could now take on a very important and strategic program for them called high-purity depleted uranium. That is really what you see here on the top line, restoring the critical national asset known as HPDU. On the right, the 10-year execution of this means that we will have a steep ramp in execution because we have to construct the facilities. We have cleared all the land. We are almost complete with the initial facility.
We will be complete here in the next year or two on the other two facilities to manufacture up to 300 metric tons of high-purity depleted uranium in our facility in Jonesborough, Tennessee. That steep ramp is through the construction period. Then you see it level off a bit just during operations, and that is where the operational efficiency, our focus, our relentless focus on margins comes into play. We will start driving better margins in the out years post-construction, commissioning, and through initial and final operations or enduring operations. Staying with special materials, I will talk a little bit about unobligated enriched uranium on this slide, and then I will talk about what the future looks like as projected by the U.S. government. We completed highly enriched uranium enrichment in the 1990s, but we still enriched till about 2013. That enrichment was focused mostly on LEU.
In 2024, the government came to us, and they said, "We have this excellent technology that has been born out of Oak Ridge National Lab. We've been developing it for about eight or nine years, and we want you to fully commercialize it, or we want your proposal on how you would fully commercialize it." We went back to how we take products and products from our advanced nuclear campaign, from all the products that we've developed inside of our naval propulsion business, and we developed a program plan, and we were awarded the contract in September of last year for $1.5 billion, performing on two parallel tasks.
One is to commercialize, or not to commercialize, but scale up the operation and prepare this centrifuge, it's called the DUECE centrifuge out of Oak Ridge National Lab, prepare that for mass production, and then also prepare all of the facilities and the licenses and all the requirements to take that centrifuge and enrich all the way through highly enriched uranium. These two parallel paths we started a year ago, it's going quite well for us. The relationship that we forge with that national lab with this customer has been very strong, and we expect to continue that for this program in particular. Like I mentioned, and Rex mentioned this as well, the government knows strategically that we, as the United States, need to have some control over the entire enrichment pipeline.
Right now in the U.S., there are about 4.8 million SWU or separative work units of enrichment capacity in the U.S., but none of that is owned by the U.S. government or a U.S. company. There's 15 million SWU, so 3x that consumed just by the commercial marketplace. The emerging enrichment market is enormous. It's enormous on the commercial side because we have an impending ban on import of Russian uranium, which is a pretty substantial supply to the world and the U.S. We have this demand signal from this dropping supply in our stockpile of highly enriched uranium. A lot of opportunity enrichment. What BWXT is focused on is what we consider unobligated fuel, which is enriched uranium for the government's purposes.
The reason it's called unobligated is because it has no obligation to a treaty worldwide because we manufacture and we use all the components from U.S.-sourced materials. There's four parts to the strategy that you can all read in the GAO report. One is use the current available inventory of unobligated LEU and HEU. There's some downblending work in there, and I talked about that on a previous slide. Deploy large centrifuge technology. The problem with that is all of the material in a large centrifuge is not sourced from the U.S., so it cannot currently produce unobligated fuel. Develop and deploy small centrifuge technology, which is this DUECE platform that's been invested in by the government for nearly 10 years. Then develop a large-scale, unobligated enrichment capability. That's something that we're working on. I talked about that on the previous slide in those two parallel paths.
But this inventory needs to be replenished and the gap between HALEU and HEU must be filled. That is what you are seeing on the right side. Over the next couple of decades, what we expect to see is the government to understand how they want to go off and procure that entire enrichment pipeline, not just the HEU that we will be enriching, but the entire pipeline. We feel really well-positioned for that because I have staff that are working all day, every day, understanding how we can mass produce these centrifuges. We can get to an economy of scale and ultimately propose to the U.S. government that this enrichment pipeline can be fulfilled by investments that they are making now and have been making for a decade. Going over to the financial outlook, I talked about the revenue at $2.6 billion.
Adjusted EBITDA for 2026 is $520 million, with the margins about 20.5%. At the beginning of the year, this was 19% margins. Because of what we have been focusing on, I talked about operational excellence and how we are using technology and how we are just doing the nuts and bolts factory optimization throughout the entire 3 million square feet in Government Operations . We have been able to raise that margin above 20% to about 20.5%. Once again, we are not done there. We are going to continue to grow our margins because as you start to gain operational efficiencies, other efficiencies become more clear, and we are prioritizing that. I have aligned my OpEx teams to focus on that.
I have provided stretch goals to my entire general management team, and they are excited about it because they have staff that are excited about bringing new technology or new processes or new ways of staffing or new factory fulfillment. There are just tons of different methodologies that have been employed here to continue to grow margins. We have our predictable core growth, we have our $6.8 billion backlog, and we will continue to grow there. But we have these new opportunities in special materials, essentially commercializing the enrichment capability that we have, HPDU, the high- purity depleted uranium, and then the advanced nuclear segment through this Janus program, through the pathfinder known as the Pele program, is going to become real, and it is going to become real very soon, including the TRISO opportunity that not only fulfills our own needs, but the entire marketplace.
In 2030, we expect to have mid to high single-digit CAGR as compared to today, high single-digit CAGR for EBITDA, and then margins are going to continue to expand, and we will relentlessly pursue that as well. Back to our key takeaways. Inside of Government Operations , we have this unmatched experience. We have great customer relationships. We have the sole source contracts that are proof that these customer relationships and our deliveries are exactly what they need to be for this set of really important clients. We are continuing to invest in the advanced nuclear platforms. We are doing that in both reactors and fuel. We are doing that with a coherent strategy that we have been developing over the last decade that we are continuing to implement and refine as new opportunities come to us. We have a very predictable and growing revenue base, and we are continuing to drive margins.
It's the vitality that's been injected into this business over the last several years, really starting with Admiral McCoy, starting with a resurgence of a lot of new nuclear opportunities with all the staffing that we've brought on board. It's palpable, and I walk through these facilities every quarter, and I talk to staff, and I understand what's important to them, and they are excited about producing more, doing it smartly, and then also growing this business alongside with Commercial Operations. With that, I'll turn it over to Mike Fitzgerald, who will talk about financial strategy and outlook.
Thanks, Joe. It's great to see so many familiar faces today, and I just want to thank you for being here and the continued interest and support for BWXT. I do want to acknowledge we are running a few minutes behind, so I will try to focus on the key financial messages as we go through this. For those I haven't met, I'm Mike Fitzgerald. I'm the CFO for BWXT. I've been with the company for about four years, and I've been in this seat for about a year and a half. I think, you look at today, you hear about the growth and the opportunities ahead of us. My job over the next several minutes is really to translate that into what that means financially. What does that mean for growth? What does that mean for margins?
What does it mean for cash generation, and what does that mean for capital allocation? When you look at the center of this, it's really about durability. We believe that we can compound earnings and cash flow at very attractive rates while still maintaining financial discipline that has been important and that you've gotten to know from us. As I go through the financial section, I want to leave you with five key messages. The first, we expect sustained profitable revenue growth. This is supported by our backlog, our durable end markets, and our multiple growth drivers. Second, we see a clear path to margin expansion. This will allow adjusted EBITDA and earnings to grow faster than revenue. Third, we expect earnings growth to translate into meaningfully higher free cash flow.
Fourth, we will remain disciplined in how we reinvest that cash, investing organically through disciplined M&A, or with a focus on strengthening our core strategic markets while continuing to return capital to shareholders. Fifth, our strengthened balance sheet provides the strategic and the financial flexibility to pursue compelling opportunities and maintain appropriate leverage and liquidity for the business. Together, these elements create a financial model that we believe can compound earnings and drive additional cash flow and shareholder value through 2030 and beyond. Before we look forward, I think it's important to acknowledge how much of the BWXT financial profile has changed. If you look at 2020 to 2023, revenue grew at approximately 6% annually. From the 2023 to the midpoint of our 2026 guidance, that has accelerated to 15%. More than half of that's organic, and it's been complemented by additional acquisitions.
If you look at adjusted EBITDA, it shows a similar acceleration. You had 3% in the earlier period, accelerating to 12% from 2023 through 2026. But perhaps the most significant change, I think, in the BWXT story is around free cash flow. We came into the decade following a few large capital programs and with inefficient working capital, which led us to having negative free cash flow, as you can see in 2020. Since then, we've continued investing for growth. But at the same time, we've focused on working capital performance. And importantly, what we've seen is a significant improvement in working capital or free cash flow performance and is expected to reach $345 million- $360 million based on our current guidance. So the takeaway is not that BWXT is larger. It's the quality of our financial model has changed.
We have a higher growth rate, we have a larger earnings base, and we have significantly stronger cash generation profile. And we're doing this even while investing at continued heightened levels for the opportunities ahead. From a segment perspective, we're seeing it really across the business in both segments. In Government Operations, Joe described how we went from a low single-digit growth to high single-digit growth. We're expecting approximately $2.6 billion of revenue this year. Growth is being driven really across the board. You see it in naval nuclear propulsion, you see it in the evolution of advanced technologies, you see it in special materials. And if you look at our adjusted EBITDA, we're growing as well. And I do want to acknowledge that we have experienced some modest margin compression, and that has primarily been driven by mix. But we continue to operate very strongly.
You heard a lot of the initiatives that Joe talked about, and we see a very clear path to margin expansion. Importantly, Government Operations has become a high-growth business, but a very predictable foundation for what we're calling the predictable core. If you look at Commercial Operations, I think that's even seen even more significant improvement. Revenue's grown from $500 million in 2023 to more than $1.2 billion expected this year. John talked about the CANDU life extensions, the early work that we're doing on SMRs. Don't discount our aftermarket services. We've had a medical growth, we've had strategic acquisitions, and you're seeing that compound. Adjusted EBITDA has increased from approximately $60 million to more than $160 million. So when you look at both segments, they enter into the next several years with a substantially stronger growth profile than they had before.
And when you combine that with operational initiatives and what we're doing to continue to support and increase margins, we'll see an increase in exponential compounding of earnings and cash flow. Rex talked earlier about the investment philosophy. Let me put some numbers around this. Across 2024, 2025, and 2026, we will have allocated approximately $1.6 billion of capital. A significant portion of that has gone directly back into the business. We've talked about the BWXT Innovation Campus, optimizing our naval nuclear propulsion facilities, the expansion of our Cambridge manufacturing plant, and ongoing maintenance and regulatory investments. We've also deployed capital through disciplined M&A. We discussed today around AOT and Kinectrics in 2025, and most recently, PCG. And throughout that period, we've continued to have a consistent and growing dividend and modest share repurchases. The common denominator here is discipline.
Capital will go where we believe it can generate long-term returns. One of my top priorities when I took over as CFO was to optimize and strengthen the balance sheet. My belief was that as our cash profile has changed, our balance sheet needs to evolve with it. Last November, we issued $1.25 billion of convertible notes at a 0% coupon with a capped call taking the conversion premium up to 100%. We did this to pay off our credit facility, add cash on the balance sheet. At the same time, we simultaneously renegotiated our credit facility terms to be more flexible and increase capacity. Following the recently announced PCG acquisition, we have $400 million of cash and $1.7 billion of total liquidity. If you look at this time last year, following the Kinectrics acquisition, liquidity was less than $300 million.
That is a meaningful increase in our financial flexibility. The next step on this path is towards investment grade. Last week, we were very proud to announce that Fitch had assigned us an investment-grade rating, and we're pursuing investment-grade ratings for other agencies as well. We're also evaluating alternatives to address our medium-term debt maturities. Our focus is on reducing the cost of capital, supporting our investment-grade objectives, maintaining our net leverage within our targeted 2x-3x range, and at the same time, making the balance sheet a strategic asset. We believe this will give us greater flexibility to invest organically, to pursue disciplined M&A, and manage capital returns while maintaining the financial discipline that you've come to expect from us. Importantly, we have more strategic and financial flexibility today than we've had in the past, and that expands the range of opportunities that we can consider.
I've given you the historical perspective and a snapshot of where we are today. Now let's turn to what that means through 2030. Historically, we've provided medium-term growth rates over a three- to five- year range. Given the visibility we have today and based on investor feedback, we wanted to provide specific 2030 targets for revenue-adjusted EBITDA and free cash flow. On revenue, we're targeting $5.5 billion-$6 billion in 2030, which is a low double-digit annual growth rate from 2026. We're seeing growth across both Government and Commercial. For adjusted EBITDA, we're targeting $1.1 billion-$1.2 billion. That's a low to mid-teens annual growth rate. In other words, we're expecting earnings to grow faster than revenue, driven by scale, operational excellence, and the margin initiatives that we've discussed. These will offset what we see from a mix headwind standpoint.
We're targeting free cash flow of $525 million-$575 million, which builds off the substantial growth that we've seen in free cash flow over the last few years. The most important point is the combination. Sustained revenue growth, expanding margins, increasing cash generation. That framework is diversified across the company. You heard today, it's not dependent on one government program, it's not dependent on one reactor technology, and it's not dependent on a single geography. One reason that we have confidence in the revenue target that we lay out for 2030 is the dramatic improvement that we discussed around backlog. It's the key foundation of what we're calling that predictable core. You've heard a lot about the individual wins today, so I'm not going to repeat all those.
I think what is really important to look at is if you look at book-to-bill, we have remained over 1x over the last few years, and we are 1.7x on a trailing 12 months basis as of the second quarter. I just want to reiterate, this is true contracted work and customer commitments. We are not talking about a market forecast or pipeline opportunities. This is real commitment. As of the second quarter, $4.5 billion of our backlog is expected to convert to revenue by the end of next year. That provides a substantial base, not only for the rest of this year, but for all of 2027, and that amount is up 40% year-over-year. When you look at the long-term backlog, it is also up 40%. This gives us a ton of confidence in both not only the near-term outlook, but the longer-term growth trajectory of this business.
While backlog gives us confidence in the base, what I wanted to show on this slide was how that base combines with incremental opportunities to take revenue from $3.8 billion today to $5.5 billion-$6 billion in 2030. The first layer, as we have discussed, is the predictable core. That represents a little over half of the growth forecast. So in Government, we are talking about high-priority CONUS programs that are supported by long-term customer relationships and contracts, includes naval nuclear propulsion, special materials, among others. In Commercial, this is about our kind of service and aftermarket portfolio, along with visible large-scale nuclear and SMR opportunities. The second layer is really about incremental organic growth. So when we think about that is the expansion of the naval nuclear that Joe discussed. It is the special materials upside, it is advanced nuclear that we are continuing to see progress on.
It is starting to use our U.S. commercial facility that we have established with the PCG acquisition, and it is additional large-scale and SMR opportunities that have not been captured in the core. Then finally, we layer on their disciplined M&A. This is going to be a key part of our strategy. We see opportunities to strengthen our positions, but this is going to be within our core strategic markets. We want to add differentiated capabilities and capacity. We want to create additional avenues for growth, but we need the strategic and the financial case to be compelling. As you think about the path to 2030, I would not expect this to happen in a growth or a straight line. The growth and the timing of opportunities can convert, so any given year may be a little bit different from a cadence standpoint.
However, I think we feel very confident in the long-term growth trajectory, and we will talk a little bit about that more when I talk about the 2027 framework. So if I sum up this slide, I just want to reiterate, we do not need to win every opportunity discussed to achieve our objectives or our targets. We have a strong visible base, we have multiple pathways to additional growth, and we are not dependent on a single program, single platform, single customer, or any single future acquisition. Revenue growth is only part of the financial opportunity that we see. The next part is about improving the economics of that growth. We are laying out a path from 17.5% adjusted EBITDA margin in 2026 to approximately 20% by 2030. The interesting thing that gives us a lot of confidence in this is a lot of this is within our control.
When you look at the factors, operational excellence we've established, I think you've heard about how this is an organizational-wide initiative focused on simplifying processes, improving productivity, reducing inefficiencies, increasing throughput. Pricing and value is really about being disciplined in how we price our differentiated capabilities and the work that we pursue. When you look at volume and scale, we believe that that will provide meaningful benefit in commercial as well as across the business as additional overhead leverage is maintained through additional scale. This represents about 300 basis points of opportunity, but we want to be balanced, so we also explicitly are accounting for growth investment and mix offsets within that to get to the 20% target. I think the important thing here is that 20% doesn't assume that mix is going to be more favorable.
We're expecting to earn that improvement through execution, through productivity, through value capture, and through scale. Combined with our revenue outlook, that supports low- to mid-teens adjusted EBITDA growth. The next part of the model is converting free cash flow from earnings, and that's important. I know it's an important focus for many of you. If you look at free cash flow, our free cash flow is compounded at approximately 18% from 2023 to the midpoint of our 2026 guidance. We're coming off a depressed base, so we're not assuming that that's going to continue indefinitely. But I would say that from here through 2030, we're targeting low double-digit free cash flow growth. There's three primary drivers. The first is the earnings growth we just discussed.
The second is our disciplined capital spending, and I want to be clear that we are targeting CapEx at 5%-6% of revenue, and our continued focus on working capital management. Growth itself will consume some working capital, so we have factored in some of those offsets, at least in our overall framework. The result is ultimately a free cash flow target of $525 million-$575 million. I think for investors, this is probably one of the more important changes in BWXT's story. We're not simply targeting higher earnings. We expect those earnings to translate into substantially greater cash generation. The target already incorporates continued investment in the business for the opportunities that we're seeing ahead.
If I put this differently, you can look at the trajectory and see that we will yield over $2 billion of cumulative free cash flow from 2026 through 2030. That really materially changes what BWXT can do strategically. That brings us back to capital allocation. Based on the framework that we've outlined and assuming net leverage remains at the targeted 2x-3x range, we estimate $5.5 billion of available capital to deploy through 2030. We expect CapEx, as I mentioned before, to be 5%-6% of revenue, with a meaningful portion of that directed towards organic growth. We expect to maintain a consistent and growing dividend, and share repurchases will continue to remain an option. After those uses, we will have approximately $3.5 billion of additional capital deployment capacity. That gives us really a significant amount of strategic flexibility.
If you look at it from a prioritization standpoint, our first priority will continue to be organic growth. Disciplined M&A will continue to be an important part of how we build the portfolio as well. We have more capacity and flexibility today than we've had in most recent years. That means that we're not anchored to the same size of transactions or the types of acquisitions that we've done in the past. But I do want to be clear that what we're focused on is strategic fit. We're focused on the quality of the assets. We're focused on things that will generate attractive risk-adjusted returns. When we don't see sufficient reinvestment opportunities, we will return incremental capital to shareholders. Rex showed a version of this slide earlier, but I wanted to put some numbers around our approach to organic investment.
We're asked about this frequently, which makes a ton of sense just given the magnitude of the opportunities that we see. From 2024 through 2026, cumulative CapEx is approximately $565 million, so roughly about 6% of revenue. More than half of that was really directed towards capacity expansion in both Commercial and Government. Going forward, we expect total CapEx of approximately 5%-6% of revenue, roughly 3.5%-4% for maintenance capital, and another 1.5%-2% for growth capital. The areas investment remain consistent: capacity expansion, productivity, operational excellence, and digital transformation. But every project competes for capital. We evaluate investments based on their ability to support growth, improve margins, advance a strategic objective, and carry an acceptable execution risk profile. In that center of that framework is financial discipline. The objective is not to spend more because the markets are attractive.
It is to direct capital towards sustainable growth and attractive long-term returns. If you look at our recent portfolio actions, you can see how we apply that discipline. The point of these acquisitions is not simply to add revenue. We are acquiring differentiated capabilities that we believe can be more valuable within BWXT by combining them with our relationships, our nuclear pedigree, and our scale. AOT is a great example. We acquired the business for $100 million in January of 2025, and Joe mentioned earlier how that helped us capture a $1.6 billion 10-year HPDU contract. Kinectrics expanded our commercial nuclear services offering that John discussed, and PCG is our first U.S. commercial nuclear manufacturing plant. But portfolio discipline also works in both directions. It means that we need to be willing to exit businesses where we believe capital can create greater value elsewhere.
We recently announced the sale of majority stake in BWXT Medical for up to $800 million, while retaining an approximate 20% interest. Taken together, these actions illustrate how we look at portfolio management. Acquisitions and divestitures are two sides of the same strategy. Concentrating our capital in areas where BWXT has differentiated capabilities, where we believe we can create the longest-term value. This can mean investing organically, acquiring complementary capabilities, monetizing businesses, or putting capital where we believe will be deployed effectively. As we look forward, this disciplined M&A will remain an important part of the strategy, as I mentioned before. Our pipeline's active. The opportunity set we are evaluating has broadened as our financial capacity and strategic position have strengthened. We're focused on assets in our core strategic markets where we can add additional value through differentiated capabilities, strong market positions, or revenue synergies.
But disciplined M&A means strategic fit and financial returns have to work together. We expect positive NPV, including achievable synergies. We target EPS accretion in year one, excluding one-time amortization and integration costs, and we look for attractive margins of sustainable organic growth. We have greater financial flexibility today, and we are not anchored to what we have done in the past. The gating factors here are strategic fit and our confidence in execution. We remain very active. We have a great team that is led by Rik Geiersbach, who is with us here today. The objective is not simply to acquire businesses, it is to add differentiated assets that can create more value as part of BWXT than they can on their own. I will finish the financial outlook by bringing this back to the near term.
First off, as Rex mentioned, we are reaffirming our 2026 guidance. We have had a really strong first half. Our backlog remains robust, and we are expecting a solid performance in the second half. We will provide additional detail with our third quarter results in early November. For 2027, we wanted to provide a preliminary framework because there are several moving pieces in the portfolio, including the PCG acquisition and the planned sale of BWXT Medical.
For purposes of this framework, to be clear, we are assuming that BWXT Medical closes at the end of 2026. Our preliminary framework calls for high single-digit revenue growth, high single-digit adjusted EBITDA growth, and modest margin expansion. If you look at this from a Government segment perspective, we expect high single-digit to low double-digit revenue growth in total, and that is driven primarily by mid-single-digit naval nuclear propulsion growth and robust double-digit special materials growth as the defense fuels and the HPDU programs continue to ramp.
We expect Government margins to be flat to modestly higher, with strong operational performance partially offset by mix from the continued ramp of the customer-funded infrastructure programs. Within Commercial, we expect high single-digit organic growth in 2027, and we are coming off a particularly strong year of growth in 2026. So it creates a little more challenging year-over-year comparison, but it also assumes kind of a measured contribution for new orders. So there is potential upside depending on the timing of orders and how we execute. Reported Commercial revenue growth is expected to be low single digits as the full-year contribution of PCG is largely offset by the assumed planned sale of BWXT Medical. We expect commercial margins to expand 50 basis points- 100 basis points, really 100 basis points excluding BWXT Medical, which reflects the continued improvement of that underlying business.
The reason that we are providing this 2027 framework now is that it is the first year on the path to 2030, and we wanted to make the bridge to 2030 visible. As you can see, we have strong underlying organic growth, initial margin expansion, and continued cash generation. To wrap it up, let me leave you with the financial thesis for BWXT. We have a greater visibility, a stronger growth profile, and clear path to higher margins and substantially higher cash generation. That cash generation, combined with the strengthening of our balance sheet, gives us increasing opportunities to invest behind what we are seeing in the markets ahead. So the model is straightforward. Really grow the business profitably, expand margins, convert those earnings into cash, and reinvest that cash with discipline.
As we do these things consistently, we believe BWXT will compound earnings, free cash flow, and shareholder value through 2030 and beyond. With that, I'll turn it to Rex for closing remarks.
Okay. Thank you, Mike. I'll wrap it up here. I do want to thank you again for attending, those of you who came in person and those that joined us by way of the webcast. We're honored by your participation and your interest in BWXT. I do want to thank my team for delivering, I think, very clear and compelling message today for investing in BWXT. Particularly thanks to Chase Jacobson, who leads investor relations and put this all together. I will conclude by returning to the investment thesis, a single chart here, and make five key points for you. First, the demand is inflecting now. I think we've made that case clear. As we've said multiple times today, that's showing up in our backlog. That increased from $4 billion to $8.4 billion.
The demand is underscored by these major secular themes that we talked about, that intersection of economic security, national security, and energy security, all of which are begging for nuclear solutions. That's the reason why nuclear is in the spotlight these days. I think we've established that BWXT appears in virtually every part of the value chain. No one else could make this claim, I'm quite certain. We participate in literally every uranium assay, from high-purity depleted uranium all the way up to high-enriched uranium. Certainly no one else in the free world could say that. We work in virtually every type and scale of reactor technology, light and heavy water reactors. High-temperature gas reactors, liquid metal, molten salt in scales that range from as low as about a megawatt up to gigawatt scales. We cross all these project phases. We start with licensing and safety analysis.
We do design of components and manufacturing thereof. We provide fuel. We have aftermarket services. Everywhere you look in the nuclear space, you're likely to find BWXT being there. We have this unmatched record of delivery. It's been said multiple times today, but it bears repeating. We've delivered 425 of these exquisitely beautiful small modular reactors to the Navy . There's an existence proof that small modular reactors can be built, and that they can run successfully, and that you can maintain a supply chain for them, and we've been doing that for decades. We have delivered 325 steam generators to the commercial nuclear power market, 60 more in backlog. Decades of nuclear fuel delivery to the Navy, and half the commercial fuel to the Canadian market through John's business to Ontario Power Generation.
We allocate capital to improve capacity, capability, and efficiency in our existing plants, and we acquire to amplify our strategic intentions. I think we have made that case very clear today. I am thrilled with the acquisitions that we have done historically, and they have delivered significant value for our shareholders. The acquired assets have largely outperformed the acquisition business cases. Kinectrics is on fire. AOT is on fire. I expect we will see a similar story at PCG unfold, and the ones that are in the rearview mirror. When we did the GE acquisition in Canada, all of those have been paying dividends for our shareholders. Then we return capital to shareholders when that is the best use of our capital. We are spring-loaded for future growth. We have powerful, defensible, long-cycle franchise programs, which are that core that we talked about. These are high-quality, highly predictable business.
Then we have got this optionality for future growth that is expressing everywhere. Special materials, advanced nuclear. We will expand in technical services geographically and otherwise. The commercial power one I talked about, I compared this period to the beginning of the 1970s, 1980s, and 1990s when the globe delivered 600 large reactors. We are going to need at least that many to satisfy the power demands of AI, electrification, and to replace existing infrastructure. It would not surprise me if we build 1,000 large reactors in the future, and we certainly need to do so. The wrapping around all the foregoing is this persistent pursuit of operational excellence. Our particular flavor of it is Driving Performance Excellence, but we are dead set on improving the quality of the business, improving operations as we go, driving down the price of non-conformance, driving up margins.
You heard Mike forecast that we could go from 17.5% adjusted EBITDA margins now to about 20% when we get to 2030, and we have got a clear path for that. I did assert in the opening that this is the most exciting time in the history of this company, and I think we have made that point resoundingly today. I do think the scale of the opportunity is astounding, and I also believe that BWXT is extraordinarily well-positioned to take advantage of that demand and create an opportunity to produce tremendous shareholder value. Okay. With that, I will close, and thank you. We will take a brief break. I will pull Chase back up here to the microphone to announce this.
Yeah. Thanks, Rex. We are going to do an eight-minute break. We are going to come back at 11:15 for Q&A. Thanks.
[Break]
Okay. I think we're good to get started. Okay. We're going to do a little bit of a Q&A session here for the next 45 minutes or so. In addition to the speakers today, we have Suzy Sterner. She's our Chief Corporate Affairs Officer, spends her time in D.C., so great insight to everything going on there. Easy to figure out. And we also have Rik Geiersbach, who's our Chief Strategy Officer, joining the panel today. I just ask that we have [Kelsey] and [Beth] are bringing around microphones, so just please introduce yourself, and if your question is directed at somebody, please address them with it.
And yeah, let's get started. Oh, and if you are online, feel free to submit your questions via the portal, and I will try to get to a few of those. Start with Mike. Oh, sorry, we had Marc Bianchi.
Hey, thanks, Chase. Marc Bianchi, TD Cowen. Thanks for the presentation, guys. It is an exciting outlook for the next several years here. I was hoping you could unpack a little bit the growth opportunities from now to 2030. Talk to us about, I think you had a pie chart of how much was sort of service, fuel, large components for today. Maybe talk to us a little bit about what that pie chart would look like in 2030 so we can get a sense of the drivers of the growth opportunities.
I do not think the pie chart changes that dramatically, Marc. I do think we did not specifically lay out exactly specific quantification of each of those opportunities, and one of the reasons is primarily because we see growth really across all of those opportunity sets, and we do not want to be held to one path versus another. I think we feel very comfortable with what we are seeing. I will tell you this, when you look at the Commercial business, we are going to continue to grow our aftermarket services business. However, I do think we will see an inflection point of the new commercial nuclear build as we get past 2027 and into the early, later as part of this decade. So that is an inflection point.
That is one of the reasons when you look at 2027 kind of initial framework, that we are guiding a little bit lower than what we are seeing over our overall 2030 is because you are going to see that inflection in 2028 and 2029. So I think that is the biggest point there. The other thing I would say is that we continue to see opportunity set as it relates to the infrastructure build and special materials in the Government Operations segment. The important thing to think about there is that those are long-tail programs. There is significant upside to those programs, and I think we highlighted some of the opportunity set that we see. So those could grow exponentially in comparison to kind of our current framework on the Government Operations .
I would say those are the biggest maybe changes that you'll see over the next few years, but otherwise, the great thing is we're seeing growth opportunities really across the portfolio, and so I think there's a number of ways that we can win and hit those targets.
Okay. Mike?
Hey, good morning, guys. Mike Ciarmoli, Guggenheim Securities. Thanks for all of the information here. Rex, loved that story. I remember it well. Just on the outlook, I guess, Mike or Rex, as we think about that growth trajectory, it seems that there's some sort of placeholder for M&A there. You're going to have a lot of capital to deploy. Is that embedded in the outlook? Then I guess the bigger question, and we're getting a lot of this, the opportunity with Westinghouse, I think you framed it as a couple hundred million. Is your dollar content locked in there yet? Do those orders, if we get those orders by year-end, does that change how we should think about the slope of growth? I think, Mike, you just said it's more like a 2028 inflection, but just any additional color there on Westinghouse and M&A?
So two questions, right? One, how much M&A is in there, I guess for Mike, and then probably for John to talk about the content on Westinghouse.
Yeah. To be clear in that, over 50% we see in our predictable core from an organic growth standpoint. We did include M&A as part of additional growth opportunity set. However, as I mentioned in the comments, we are not beholden to M&A in order to hit our growth outlook. I think the reason we did not specifically break it out is because we could see multiple paths, and we wanted the optionality to be able to pursue those paths. From a 2027 standpoint, and I will let John talk about the specifics around Westinghouse, but we do see opportunity for upside, as I mentioned. A lot of that will depend exactly on timing of orders as well as the execution of those builds. We did not want to get too far ahead. We will have some additional details as we get into the Q3 results.
Yeah, I would add we are building a really great relationship with Westinghouse. We have been doing a lot of work on establishing a commercial relationship between us for those components. We have got a lot of bidding that we have done there for plants anywhere they deploy. They know our capacity. They know what we are ready to do and what we are capable of. They are working through qualifying us for all of the components that they need. We are optimistic about how that opportunity looks for us. We have got the legacy work that PCG has done. All of that makes us feel pretty good about the outlook there.
Mark?
Thanks, Chase. Mark Shooter from William Blair. Rex , you have spoken a lot about using government opportunities to establish capacity and then the potential to repurpose that also for commercial applications. The GAO outlined $37 billion in their report for domestic enrichment needs just for the NNSA or other government uses. I am just wondering if you could comment a little bit on that $37 billion number and what share you guys may look to take from that. If that is just a government number, is there a larger commercial obligation?
Yeah, thanks, Mark. I will comment and then ask Joe Miller to add to it. That $37 billion number was about what it would take to reconstitute the defense fuels capability in a non-obligated fashion. That is all the way from mining through eventually high-enriched uranium.
So the opportunity there, as we stated in the presentation, is around low-enriched uranium and high-assay low-enriched uranium, and we are going to go and compete for that. I think we have a chance to win a good chunk of that, if not all of it, is how I see it. Now, as to commercial possibilities there, because it is an unobligated fuel capability, U.S.-mined uranium or bringing depleted uranium tails up to natural, an above- the- ground mine in a way, and building with U.S.-sourced materials, machining in U.S. plants and all of that, there is going to be a natural competitive disadvantage to that capability relative to the commercial market, particularly especially as it relates to established capability like Urenco's plant in New Mexico.
That said, if you could work with the government on an arrangement where you could make sales on a contribution margin basis on the edge of that business, I think there is maybe a commercial opportunity there. But let there be no doubt, this is an enormous opportunity, even with just the government demand.
Yeah, I will agree with that. I will also say that scale-up is really important in driving down the cost of delivery of the individual centrifuges. Rex mentioned all of the equipment, all of the components have to come from U.S. sources. We are really focusing on how does the design compare to how we can mass produce, to how we can create the supply chain. Then we need to go back to the government and say, "This is what we think it is going to look like." Then opportunities will come from that. Right now, I mentioned the $1.5 billion contract. That is to get us to a point where we can go off and start the enrichment process. There are more contracts that are follow-ons from that that we expect just from the existing start that we had last year.
Layering on everything that Rex said just provides us more opportunity as we continue to scale.
Tomo and Bob's next.
Thank you for taking my questions. Tomo Sano from JP Morgan. On commercial components, AP1000 and SMRs appear not to be fully captured at CANDU-like breadth. Could you talk about any reasons, opportunities, and then how you think about to get those kind of opportunities in-house versus including potential M&A, please?
Well, for the Westinghouse components and for the SMR components we're working on, we're not in need of additional M&A activity to be able to produce those parts. We can make those in the facilities that we have today. Other than, as I said, we want to add capacity for very large components on water for logistics transportations reasons. I think we're really well-positioned for that, just as we are for the CANDU reactor components. It's just that our scope on a CANDU is very large because of our history there and everything we can do for them. I wouldn't characterize them any differently when you look at those reactor types in terms of our opportunity and what we can deliver with what we have within our capabilities today.
John, there's a question here online about the chart that we showed with the CANDU opportunities, right, and the path well into the 2040s. Can you just talk about what your view on that market is and what the revenue outlook could be? Or what's your view of revenue potential is out longer term?
Yeah. What we are looking at I think in the near term is at least four reactors at the Bruce site, what Bruce Power calls Bruce C, and whether that is CANDU or another technology will be decided soon. Ontario Power Generation is looking at a site near their Darlington site called the Wesleyville Site, and they have said probably eight reactors at that site. It could become one of the world's largest nuclear generating sites. Both organizations are really advancing into this. Bruce Power has been working on environmental assessment kind of work for a while. They just got CAD 300 million from the provincial government to continue developing that. OPG has formed a dedicated team to deploy new nuclear.
What we are looking at, as I said, is maybe $350 million- $700 million per reactor, and expect those reactors would deploy with sort of a gap between each one coming online that would be something like 18 months or so. There is probably overlap between that Bruce C work and that Wesleyville work.
Perfect. Thank you. Bob, in the middle here.
Thank you. Hi. Bob Labick, CJS Securities. Thanks for a great presentation. Appreciate it. One of the things you talked about was you are the current leader in TRISO production, and there is noise out there, and that is a big opportunity going forward. In your growth CapEx numbers, which you kind of just gave us for the next few years, you have 1.5%-2.0% of revenue for growth, and then the rest for maintenance. Is there TRISO expansion in that, or when do you decide to put more capital behind TRISO expansion as that market begins to develop in the 2030s and beyond?
The answer is yes. We do have TRISO expansion capital within those targets, and we do feel comfortable that we could stay within those targets. I would say right now we are expanding our TRISO capacity. We do see some increased demand over the next few years, and we are planning to invest capital to expand the capacity. Those will be modest investments, and they are tied directly to demand signals that we are seeing. Over the longer term, what we really need to see is HALEU availability in order for us to really feel confident in the longer-term outlook related to TRISO. We have not made a decision on a new greenfield facility, and we probably will not make a decision on that for a little while.
In the time being, that is what we are focused on, trying to increase the capacity and move that forward based on what we can. I do not know, Joe, if you have anything else to add there, but—
No, I think it is well put, and we are watching the market demand signal. We are feeding the market out of our facility in Lynchburg right now. Mike mentioned it, I mentioned it. We are making some small investments there to stay ahead of the market, but we watch all the dynamics, right? Where is the HALEU going to come from? How fast can we make TRISO for our market, and where are the real contracts? The desire signal is high. We are translating that into demand signal, and we are staying ahead of the curve just by keeping tabs on what is happening in the marketplace.
Andre?
Yeah. Thanks for taking my question. Andre Madrid with U.S. Bancorp BTIG. I wanted to talk on naval nuclear maybe for a second. You mentioned 4%-6% CAGR. That is based on existing programs, but I guess just what does the high- water mark look like if battleship and AUKUS hit? Additionally, I think during earnings you had mentioned that Ford-class procurement cadence might accelerate a little bit. I do not see that on the slides. Is that still on the table? If so, is that another potential upside driver?
Yeah. I think from a Ford cadence standpoint, you'll see that in the shipbuilding schedule. That did accelerate, and we have incorporated that. I think what I mentioned on the last earnings was that we wouldn't see that really until around the 2030 timeframe. That's why you're not seeing it in at least the near-term numbers. We haven't given a direct, call it, upside related to the battleship and some of the AUKUS programs. I will tell you that the battleship is not forecasted into the 2030. That still has to go through appropriations and a number of hurdles. That certainly is upside.
I know we don't really talk about content by reactor, but the reason that we laid it out with Ford being the largest, and then you can see the directional capacity with Virginia and AUKUS being the smallest, and Columbia and the battleship being in the middle, is just to give you some sense of as we get an additional, call it battleship through the factory, what could that do from an exponential standpoint? I'll just remind everybody that we don't sell a specific price per reactor because of the large fixed cost within the plants. We actually have to establish those large fixed costs and then determine how many ship sets the government needs in order for us to determine final pricing. While I'd love to be able to give a price per ship set, it just doesn't work like that contractually.
That's why we don't give a better idea just because that can change depending on just the overall volume.
Before we're going to go to [inaudible], I'm just going to take one online real quick. I guess just sticking, because it's kind of in line with the shipbuilding schedule and what's going on in D.C. Can you talk about the midterm elections and what impact do you see that having on BWXT, depending on how it shakes out?
So I'm guessing that one's for me.
That's for you, Suzy.
First, the government relations team works extremely hard and has been very successful in ensuring that we have bipartisan, bicameral support of all of our programs. So whether the Rs are in control or the Ds are in control, BWXT is still at the table, and we like to say, "If you're not at the table, you are on the menu." We're at the table. I would also highlight that our programs are priority programs for our government customers across the board. Columbia, Virginia, the Ford, right? But also enrichment that you just heard about, and we're seeing that throughout the cycle from whether, again, it's a Democratic administration or a Republican administration. So we are in good shape. For the midterms, I'll put my finger up and test the wind today.
I was checking the polls, and I'm sure you all have seen, right now, the generic ballot is up for the Dems about 8.5 points. It fluctuates. It was up to 8.7 at the end of last week. It's come down a little. I don't know why, but it has. And if you look at the toss-up races there in the Senate, seven are considered toss-ups. Sometimes it gets up to nine, and of the seven, five of those are Republican seats. So the Senate is surprisingly in play. I don't think anybody, even six months ago, would have thought that. And then in the House, it varies between 21 and 22 seats, and of those 16 are Republican. So you can see which way the wave is going. But again, for BWXT, we're in good shape.
I might add a comment to that. Suzy's team does a great job on the [ Capitol Hill] and in the executive branch, making sure our interests are cared for. I would say, as the CEO of BWXT, I experienced 20 days of Obama, Trump 45, all the Biden administration, Trump 47. We have seen changes in polarity in the White House, changes in polarity in the Senate and in the House, and the support for nuclear has endured. There is support for nuclear on the left and the right, support for shipbuilding on the left and right, and that has been consistent throughout the last 10 years. Again, I would agree with Suzy that it just does not move our business around very much.
Okay. Jan-Frans .
Jan-Frans Engelbrecht at Baird. Thanks for taking our questions today. I think this question would be for Rex, Joe, or for Mike. It has to do with special materials. If you look at $550 million of revenue in 2026, that could go to almost be a billion-dollar franchise just after this decade. I was thinking more about the margin potential for this business. Joe, you talked about automation for centrifuge manufacturing. Just how are you guys thinking about margins for that business longer term and just the technical know-how, the labor that you would need to scale up that franchise? Thank you.
I will start. I would say the margins are going to be similar to what we do for our government customers, but right now it is just too early to predict. Your point is a good one. We are building greenfield sites. We are building a lot of footprint. We are industrializing both of those operations. It is interesting from a technical standpoint as well, because HPDU is a chemical process, while the centrifuge manufacturing is a mechanical process, where we are going to be manufacturing lots in both factories. That allows us to use factory automation from a clean sheet, essentially, in how we implement both of those projects. It also allows us the capability through our other sites. Nuclear fuel sites are chemical. The mechanical processes we have in our northern sites in particular can adopt the technologies pretty pragmatically as we build out the enterprise.
I would see an uplift in margins throughout Government Operations . That's the reason why we predicted what we predicted based on new technologies being inserted into new factories, not necessarily stopping production to increase our technology base. It's too early to say specific to those two programs, but I would align them with what we normally have, and then we'll uplift the margins as we insert technology and get to a rapid cadence and a more distinct cadence of delivery.
Tom.
Good morning. Thomas Meric, Encompass Capital. Thanks, gentlemen and ladies. A capital allocation question for Rex. A lot of the inflecting businesses you have now, whether it's TRISO or enrichment, several others have been talked about today, would benefit greatly from increased capacity. I think Joe mentioned enrichment quite well. They would also benefit greatly from reduced unit cost of production for the commercial industry. I'm curious how you hold those two things in tension or even just how you think longer term about lowering unit cost of production, either a timeline or a ranking or just any kind of strategic commentary around you getting costs lower.
Joe and John to pile in here. Historically, we've been in pretty low-rate production environment. We're delivering two nuclear ship sets a year to the Navy, two- plus, two or three steam generators, a few of them a year, and that kind of thing. We haven't had sort of an eye on high- rate production and what you might do around that. These opportunities that Joe talked about in defense fuels and also in high- purity depleted uranium, we're going to have large factories with high throughput. We'll be highly focused on that. That said, even in the low-rate production environments, we are focused on what we can do around throughput in particular. OpEx is broader than that, but we've been focused on throughput.
John talked about it in his briefing, taking those steam generator deliveries from one per month up to one and a half per month. What's behind that is that when you look at where we are right now, 5 million square feet of nuclear- qualified manufacturing space, that's impressive. But the answer to every question about capacity can't be build or acquire a new plant, right? Sometimes the answer is get more production out of the plant that you have. If we do one and a half steam generators a month instead of one per month, then we've got 50% more capacity there very obviously. That's how we think about it. We're really trying to push throughput and expand at the same time.
Just to answer your question very specific to TRISO, you need a big demand signal so you can get a higher volume of throughput through the factory that you build, then you can bring the overall cost of TRISO. There is a lot of assertions that TRISO is a very expensive fuel. Well, everything is really expensive when you make a little bit of it. One of the partnerships that we have established, and it is in the press, is with Kairos. Kairos has a big demand signal for TRISO in the near future. They have backing by Google, and they want to use that backing to go off and invest strategically in the development of increasing the throughput and reducing the cost of TRISO. We are doing that with them. So they have invested in technology for pebble manufacturing and robotics and automation very specific to that fuel.
We have been investing in making fuel the right way every day for two decades. You combine those efforts with some of the advanced nuclear, advanced technologies staff that we have that have been optimizing the manufacturing practice or processes, then we can create a very cost-affordable and palatable fuel cost for TRISO in moving forward. So it is a partnership as well, not just our investment, but who do we tend to partner with? We partner with those people that can not only provide volume so we can get to an economy of scale, but also the ingenuity to help us decrease the overall delivery costs.
Yeah, so it is interesting when you think about the fact that we have got order for 32 steam generators from Bruce Power, 48 from Ontario Power Generation. What that has allowed us to do is really get into a rhythm of production at a higher rate, but also to look at investments in automation, that we can really justify much easier with that kind of backlog. So we are moving hard in that direction. That is really improving productivity and it is lowering cost. So I would say that is the main way we are addressing cost in our production.
I have a specific guidance question here for Mike on CapEx. So 5%-6% of sales on average over the medium term. You had talked about higher than that in 2027. Is that still the case, or are you in the 5%-6% range? Is there any fluctuation in that 5%-6% throughout the longer-term period?
We had signaled previously that we were anticipating a potential to go above the 6% to get into that 7% range in 2027. Right now, we're targeting 6% for 2027. That's what you'll hear us come out with in a few weeks as we set formal guidance for 2027. As far as the fluctuation, I think it's going to ultimately depend on the opportunities and the timing of where we need to make those investments. I think it's safe to assume a 5%-6% range. I don't want to give more specific guidance on that at this point.
Thank you. Pete.
Can you guys talk a little more about space? If I think about military and maybe NASA, maybe even commercial, where do you guys see is the largest opportunity in space, and is there anything we should look for in terms of traction in the next couple of years, let's say? Thanks.
I'll start off with what NASA is doing. They have a project, it's called SR-1 Freedom. It's a nuclear electric propulsion design that's being worked with the national labs and is working with NASA. That'll be the first launch in civil space for nuclear products in the coming future. That is supposed to be the pathfinder for a lunar power system, and that lunar power system is what we're seeing in early RFIs and draft RFPs and things of that nature. I see a renewed interest in space. We had this 2017 to early 2020s interest out of NASA and some of our national security customers that's now, in this new administration, converted over to the SR-1 Freedom. I would track that one as the space opportunity.
On the national security side, as I mentioned in the slides, there are other opportunities for power and propulsion, but they are pretty new. As those continue to develop, we will put more out about that.
I think that is Josh. I cannot tell.
Thanks. Josh Korn from Wells Fargo. I wanted to ask about the size of the potential investment for the defense fuels, and who is paying for that? Might any of that be funded by the government, or is that mostly on BWXT? Thanks.
We made an initial investment in defense fuels. It was procuring the land, building, starting the construction process and the design process for the construction of our demonstration facility. Beyond that, it has been a government investment. This is a government-owned technology. This is a government-owned fuel source, and so we expect that to continue. I do not know if Mike has something to add.
Jeff.
Hi, Jeff Campbell, Seaport Research Partners. First of all, congratulations on a great event. Rex, you have talked a lot about how BWXT made a pivot to become the merchant supplier to the industry, but you do have some creative work that is coming back to the fore, for example, mPower. In that case, it looks like you decided to hand that off to a third party and secure to be the merchant provider for that if it gets anywhere. I thought John said that there might be some commercial potential with Pele down the line. I wondered if that came to pass, would you follow the same playbook? Would there be a third-party partner that might be involved in that, or would that be something you would keep for yourself? Thanks.
Yeah. We will bring on partnerships to commercialize microreactors, but not for the reactor. That will be us. The way that we think about the segments, and John can add on to this, is the gigawatt scale, the SMRs, we are a merchant supplier, and we are going to stay true to that mission in perpetuity. For the microreactors, we will do two things. One, we will provide fuel for our own microreactors like we would have for Pele and for the Janus program that is using a scaled-up version of Pele. So 1.5 MW is the thermal output or the electrical output of the Pele reactor. Our BANR reactor, which is part of the Janus program now, is 20 MW. So it is a scaled-up version. That will be a BWXT design. BWXT will manufacture not just the fuel, but the entire reactor and serve as the prime for the hardware delivery.
There is also a commercial use case for this program, so we will bring partners on, utilities, people like that, or organizations like that, to help us fully commercialize that microreactor technology. Then in addition to what we will providing for TRISO, we will make TRISO for the entire industry, whether it be an SMR like Kairos or other microreactor vendors like Antares. We will continue to feed that fuel into the marketplace because volume is king here, and we need to get to volume. We need to get to economy of scale on that fuel. So it is a little bit of a mixed bag. Then when I talked about mPower, that was very specific to participating in continuing the design, testing, and licensing. But the ultimate manufacturing, much like the rest of our SMR customers, will come as a merchant supplier with John.
Yeah. We are well-positioned for that mPower supply when it comes. We did a lot of work to prepare for that, design for manufacturability. We made mock-ups. We are in good shape to be able to meet that demand just like any other SMR customer. There has got to be more questions.
Mike.
Hey. Thanks again, guys. Joe, just to stay on TRISO, can you give us a sense, maybe is it five, 10 years, full rate production? What sort of an annual market could be? Or if you want to be guarded there, maybe even just talk about where cost per kilograms are now, where revenue per kilogram is, where those could go with economies of scale.
Yeah. I would say I am not going to answer any of those questions right now just because- and they are good questions, and believe me, we have integrated models on our Pele reactor versus our 20-megawatt BANR reactor. There are different economics for both of those. The one thing that we should keep in mind that for microreactors, the fuel cost of the microreactor is substantial as compared to the overall delivery cost of the hardware. That is different from an AP1000. The fuel cost of an AP1000 is very small. It is almost in the noise. It is maybe 10% tops for the delivery of that reactor. Rex talked about what the enduring fuel costs are for a nuclear system is much less than you would have from a natural gas or other types of systems. Our combustion system.
For us, it is all about scalability, and that is the reason why—w e are not only supplying the current market right now, but we are spending a decent amount of time and resource along with Kairos to do development activities. When we hit the go button, when that market does materialize, it harkens back to Mike's comment, if the halo is there, the demand signal is there, the real contracts translate from desire to demand, we will be able to hit the go button with a very economical case. We track that in integrated models, not just with BWXT reactors, but also the partners that we are working with.
I'll take an online question here on M&A. For Rik, I guess what the question is really asking is if you could just talk about the pipeline that you're seeing and if you're changing your view in terms of size of M&A targets.
Okay. Yeah, sure. The pipeline right now is quite robust. Every business area that we talked about today has got a very robust pipeline, from assessment to cultivation to transaction to working through it, and we have them in various stages of being here. Relative to size, we continue to look for small tuck-ins, of course. We're looking at more medium-size plays, as well as some potentially more transformative plays. I think if you wanted to sort of think about the framework that we're looking at, it's going to track with our very intentional language we put in there, sort of global nuclear industrial champion, right? You can track against all those things. Global, we are clearly a strong player in North America and want to continue to be stronger. But are looking for geographic diversity, that's global. Nuclear.
We love the markets we're playing in. We continue to believe that there's opportunity there for energy security, economic security, national security. It's going to be a nuclear play. Industrial. We're not unapologetic about the fact that we make things, we service things, right? You go to Cambridge, you go to Lynchburg, you go to Barberton, you go to Mount Vernon, you go to any of these places, we are a nuclear company. We love that. We want to continue to do that. It's going to be industrial. Then champion. We want to get stuff that's high quality, that has good capabilities, that has good margins, that's going to be expansive to the earnings potential, to the margin potential, free cash flow potential as well. We want to win global nuclear industrial champion.
All right. Any final questions out there? All right. Well, thank you everybody for attending in person and virtually. Thank you to all the speakers and the Q&A panel. Yeah, feel free to reach out if you have any questions. It was great seeing everybody. Thank you.