Date: May 5, 2010
Source: EnergySolutions
EnergySolutions, Inc. (ES), a leading provider of specialized, technology-based nuclear services to government and commercial customers, today announced financial results for the Company's first quarter ended March 31, 2010.
Q1 2010 Summary
Net income attributable to EnergySolutions of $5.8 million, or $0.07 per share
Net income attributable to EnergySolutions before non-cash impact of amortization of intangible assets of $10.7 million, or $0.12 per share
EBITDA of $27.9 million
First Quarter 2010 Results
Revenues for the first quarter of 2010 were $485.9 million, compared with $437.1 million in the first quarter of 2009. Gross profit for the first quarter of 2010 was $42.7 million, compared with $50.6 million for the first quarter of 2009. Selling, general and administrative expenses for the first quarter of 2010 were $28.3 million, compared with $30.8 million for the first quarter of 2009.
Net income attributable to EnergySolutions for the first quarter of 2010 was $5.8 million, or $0.07 per share, compared with $8.1 million, or $0.09 per share, for the first quarter of 2009. Net income attributable to EnergySolutions before the non-cash impact of amortization of intangible assets for the first quarter of 2010 was $10.7 million, or $0.12 per share, compared with $12.7 million, or $0.14 per share, for the first quarter of 2009. EBITDA for the first quarter of 2010 was $27.9 million, compared with $32.6 million for the first quarter of 2009.
Reconciliations of net income attributable to EnergySolutions to EBITDA and to net income attributable to EnergySolutions before the non-cash impact of amortization of intangible assets are provided in the attached Table 4.
CEO Commentary
Commenting on the quarter, Val Christensen, EnergySolutions President and CEO, said, "Overall business activity was strong in the first quarter driven by significant revenue growth in the Federal Services and the Logistics, Processing and Disposal segments. However, we had higher costs on a number of projects this quarter that depressed gross margins and reduced our overall level of profitability. We were also negatively impacted by a temporary shutdown of one of our waste processing facilities. The facility is now fully operational again and we are working through the backlog of waste processing that accumulated during the shutdown. We expect to make up much of the loss associated with the temporary shutdown in future quarters."
Business Segments - First Quarter 2010
A summary of the results of the Company's four business segments is presented in Table 5 in the accompanying financial tables.
Federal Services
Federal Services revenues for the first quarter of 2010 were $88.6 million, compared with $66.1 million in the first quarter of 2009. The increase in revenues is primarily attributable to a higher level of activity as a result of stimulus funds used to accelerate work on the Moab Atlas mill tailings project, increased revenues at the Isotek project at the Oak Ridge National Laboratory, and increased subcontracting activity at a federal site in Portsmouth, Ohio.
Income from operations for the first quarter of 2010 was $3.8 million, compared with $5.6 million for the first quarter of 2009. Operating margin was 4.2% for the first quarter of 2010, compared to 8.5% for the first quarter of 2009. Operating margin declined due to an unfavorable shift in project mix, with increased activity on lower margin contracts, as well as a loss on a fixed-price project.
Equity in income of unconsolidated joint ventures was $2.4 million for the first quarter of 2010, compared with $1.0 million for the first quarter of 2009. This increase is primarily due to increased income from the Hanford Tank contract.
Commercial Services
Commercial Services revenues for the first quarter of 2010 were $21.2 million, compared with $21.7 million for the first quarter of 2009. The decline in revenues is primarily due to reduced activity on liquid waste processing and commercial decommissioning projects, which was partially offset by increased activity on spent fuel services.
Income from operations for the first quarter of 2010 was $2.0 million, compared with $3.2 million in the first quarter of 2009. Operating margin was 9.4% for the first quarter of 2010, compared to 14.6% for the first quarter of 2009. The decrease in operating margin was primarily due to higher costs incurred on commercial decommissioning projects.
Logistics, Processing and Disposal
Logistics, Processing and Disposal revenues for the first quarter of 2010 were $52.7 million, compared to $46.0 million in the first quarter of 2009. The increase in revenues is primarily due to higher volumes of waste disposed at the Clive, Utah facility from both commercial and federal customers, as well as higher revenues from transportation services. These increases were offset by lower revenues from the Bear Creek processing facility due to a temporary suspension of operations as a result of an overhead crane failure and an associated employee injury that occurred in February 2010 at the facility.
Income from operations for the first quarter of 2010 was $9.9 million, compared with $11.8 million for the first quarter of 2009. Operating margin was 18.8% for the first quarter of 2010, compared to 25.6% for the first quarter of 2009. The decrease in operating margin was primarily attributable to a lower gross margin at the Bear Creek processing facility due to less absorption of fixed costs at the facility that resulted from the temporary suspension of activities, which was partially offset by higher volumes at our Clive facility.
International
International revenues for the first quarter of 2010 were $323.4 million, compared to $303.3 million for the first quarter of 2009. Excluding the effects of fluctuations in foreign currency exchange rates, International revenues for the first quarter of 2010 decreased $6.4 million over the first quarter of 2009 mostly due to decreased reimbursable contract cost base and efficiency fees from our Magnox contracts. International revenues were positively impacted by $26.5 million due to foreign currency fluctuations in the first quarter of 2010.
Income from operations for the first quarter of 2010 was $16.9 million, compared with $18.5 million for the first quarter of 2009. Operating margin was 5.2% for the first quarter of 2010, compared to 6.1% for the first quarter of 2009. The decrease in operating income and margin was primarily due to lower efficiency fees recognized from the Magnox contracts and increased costs related to our other UK operations.
Outlook for 2010
The Company reaffirms its guidance for 2010. For the full year 2010, EnergySolutions expects EBITDA to range between $140 million and $150 million. The Company also expects 2010 GAAP EPS to range from $0.43 to $0.50 per share and net income before the non-cash impact of the amortization of intangibles of $0.62 to $0.69 per share.
Forward-Looking Statements
Statements in this news release regarding future financial and operating results and any other statements about the Company's future expectations, beliefs or prospects expressed by management constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There are a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including, but not limited to: (a) uncertain and weak economic conditions globally, including decreased credit availability for our customers and the decisions of individual customers to retain cash and reduce credit market exposure, (b) decreased tax revenues combined with increased demands on federal funding allocations reducing funds available for existing or proposed federal projects that we have been awarded or on which we would bid, (c) current regulatory initiatives, including restrictions on the importation of nuclear waste into the United States and the disposal and storage of depleted uranium (d) the weakening of the pound sterling and the related currency translation impact on our financial results if the currency continues to weaken, (e) adverse public sentiment that could lead to increased regulation or limitations on our activities, (f) uncertainty regarding the impact on our business of increased regulatory scrutiny of the nuclear waste industry in the U.S. and U.K., (g) decisions by our customers to reduce or halt their spending on nuclear services, (h) decisions by our commercial customers to store radioactive materials on-site rather than dispose of radioactive materials at one of our facilities, (i) the adverse impact of current or future financial conditions on the value of decommissioning trust funds, and (j) continued competitive pressures in our markets. Additional information on potential factors that could affect the Company's results and other risks and uncertainties are set forth in EnergySolutions, Inc. filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2009 and subsequent filings made by the Company. The Company does not undertake any obligation to release publicly any revision to any of these forward-looking statements.
Conference Call Details
The EnergySolutions 2010 first quarter teleconference and webcast are scheduled to begin at 10:00 a.m. EDT, on Thursday, May 6, 2010.
Hosting the call will be Val Christensen, President and Chief Executive Officer, and Mark McBride, Chief Financial Officer.
To participate in the event by telephone, please dial (866)-383-8009 five to ten minutes prior to the start time (to allow time for registration) and reference the conference passcode 18843841. International callers should dial (617)-597-5342 and enter the same passcode.
A replay of the call will be available on Thursday, May 6, 2010, at 1:00 p.m. EDT through Thursday, May 13, 2010 at 2pm EDT. To access the replay, dial (888)-286-8010 and enter passcode 53988221. International callers should dial (617)-801-6888 and enter the same passcode.
The conference call will be broadcast live over the Internet and can be accessed by all interested parties through the company's web site at www.energysolutions.com by clicking on the "investor relations" tab at the top of the home page. An audio replay of the event will be archived on EnergySolutions' web site for 90 days.
About EnergySolutions, Inc.
EnergySolutions offers customers a full range of integrated services and solutions, including nuclear operations, characterization, decommissioning, decontamination, site closure, transportation, nuclear materials management, the safe, secure disposition of nuclear waste, and research and engineering services across the fuel cycle.
Financial Tables follow
Table 1
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share data)
2010 2009
---------- ----------
Revenues $ 485,890 $ 437,109
Cost of revenues 443,187 386,511
---------- ----------
Gross profit 42,703 50,598
Selling, general and administrative expenses 28,311 30,779
Equity in income of unconsolidated joint ventures 2,363 963
---------- ----------
Income from operations 16,755 20,782
Interest expense (8,676) (7,956)
Other expenses, net (173) (230)
---------- ----------
Income before income taxes and noncontrolling
interests 7,906 12,596
Income tax expense (1,922) (4,274)
---------- ----------
Net income 5,984 8,322
Less: Net income attributable to noncontrolling
interests (151) (195)
---------- ----------
Net income attributable to EnergySolutions $ 5,833 $ 8,127
========== ==========
Net income attributable to EnergySolutions per
share:
Basic $ 0.07 $ 0.09
Diluted $ 0.07 $ 0.09
Number of shares used in per share calculations:
Basic 88,415,309 88,305,674
Diluted 88,549,964 88,337,242
Table 2
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
March 31, December 31,
ASSETS 2010 2009
----------- --------------
Current assets:
Cash and cash equivalents $ 44,883 $ 15,913
Accounts receivable, net of allowance for
doubtful accounts 344,716 260,380
Other current assets 163,355 153,213
----------- --------------
Total current assets 552,954 429,506
Property, plant & equipment, net 117,792 120,775
Goodwill 515,979 518,770
Other intangible assets,net 299,059 310,203
Other noncurrent assets 144,004 131,921
----------- --------------
Total assets $ 1,629,788 $ 1,511,175
=========== ==============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 28,488 $ 19,071
Accounts payable 155,725 110,247
Accrued expenses and other current
liabilities 234,767 167,503
Other current liabilities 15,722 12,447
----------- --------------
Total current liabilities 434,702 309,268
Long-term debt, less current portion 496,623 505,040
Other noncurrent liabilities 204,030 196,705
----------- --------------
Total liabilities 1,135,355 1,011,013
----------- --------------
EnergySolutions stockholders' equity 493,461 499,045
Noncontrolling interests 972 1,117
----------- --------------
Total equity 494,433 500,162
----------- --------------
Total liabilities and equity $ 1,629,788 $ 1,511,175
=========== ==============
Table 3
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
For the Quarter Ended March 31,
2010 2009
--------------- ---------------
Cash Provided by Operating Activities $ 39,202 $ 1,632
--------------- ---------------
Investing Activities
Purchases of property, plant and
equipment (2,027) (4,195)
Purchases of intangible assets - (372)
--------------- ---------------
Cash Used in Investing Activities (2,027) (4,567)
--------------- ---------------
Financing Activities
Net Borrowings (repayments) of
long-term debt - (10,000)
Dividends to stockholders (2,213) (2,208)
Other items (2,940) (581)
--------------- ---------------
Cash Used in Financing Activities (5,153) (12,789)
--------------- ---------------
Effect of Exchange Rate on Cash (3,052) (1,791)
--------------- ---------------
Increase (Decrease) in Cash and Cash
Equivalents $ 28,970 $ (17,515)
=============== ===============
Amortization of Intangible Assets $ 6,436 $ 6,954
=============== ===============
Depreciation $ 5,221 $ 4,697
=============== ===============
Table 4
ENERGYSOLUTIONS, INC.
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO ENERGYSOLUTIONS TO
EBITDA AND TO NET INCOME ATTRIBUTABLE TO ENERGYSOLUTIONS BEFORE
THE IMPACT OF AMORTIZATION OF INTANGIBLE ASSETS (UNAUDITED)
(Dollars in thousands, except per share data)
For the Quarter
Ended March 31,
2010 2009
-------------- --------------
Reconciliation of net income attributable
to EnergySolutions to EBITDA:
Net income attributable to
EnergySolutions $ 5,833 $ 8,127
Interest expense 8,676 7,956
Interest rate swap loss (gain) (156) 641
Income tax expense 1,922 4,274
Depreciation expense 5,221 4,697
Amortization of intangible assets 6,436 6,954
-------------- --------------
EBITDA $ 27,932 $ 32,649
============== ==============
Reconciliation of net income attributable
to EnergySolutions to net income attributable
to EnergySolutions before the impact of
amortization of intangible assets:
Net income attributable to
EnergySolutions $ 5,833 $ 8,127
Amortization of intangible assets 6,436 6,954
Income tax expense related to amortization
of intangible assets (1,595) (2,397)
-------------- --------------
Net income attributable to
EnergySolutions before the impact of
amortization of intangible assets $ 10,674 $ 12,684
============== ==============
Net income attributable to EnergySolutions
before the impact of amortization of
intangible assets per share:
Basic $ 0.12 $ 0.14
Diluted $ 0.12 $ 0.14
Number of shares used in per share
calculations:
Basic 88,415,309 88,305,674
Diluted 88,549,964 88,337,242
The Company defines EBITDA as earnings before interest expense, income taxes, depreciation and amortization. The Company uses EBITDA to facilitate a comparison of its operating performance on a consistent basis from period to period that, when viewed with its GAAP results and the above reconciliation, management believes provides a more complete understanding of factors and trends affecting its business than GAAP measures alone. EBITDA assists management in comparing its operating performance on a consistent basis because it removes the impact of its capital structure (primarily interest charges), asset base (primarily depreciation and amortization) and items outside the control of its management team (taxes) from its results of operations. EBITDA should not be considered as a substitute for net income attributable to EnergySolutions or income from operations, as determined in accordance with GAAP. EBITDA is not defined by GAAP, and you should not consider it in isolation or as a substitute for analyzing the Company's results as reported under GAAP.
The Company defines net income attributable to EnergySolutions before the impact of amortization of intangible assets as net income attributable to EnergySolutions plus amortization expense of intangible assets, net of the related income tax expense of these items. Net income attributable to EnergySolutions before the impact of amortization of intangible assets and net income attributable to EnergySolutions before the impact of amortization of intangible assets per share are not computed in accordance with GAAP. These non-GAAP measures may be useful to investors seeking to compare the operating performance on a consistent basis from period to period that, when viewed with its GAAP results and the above reconciliation, management believes provides a more complete understanding of factors and trends affecting the Company's business than GAAP measures alone. Net income attributable to EnergySolutions before the impact of amortization of intangible assets and net income attributable to EnergySolutions before the impact of amortization of intangible assets per share should not be considered as a substitute for net income attributable to EnergySolutions or net income attributable to EnergySolutions per share, as determined in accordance with GAAP. Net income attributable to EnergySolutions before the impact of amortization of intangible assets and net income attributable to EnergySolutions before the impact of amortization of intangible assets per share are not defined by GAAP, and you should not consider them in isolation or as a substitute for analyzing the Company's results as reported under GAAP.
Table 5
ENERGYSOLUTIONS, INC.
REPORTING SEGMENT INFORMATION (UNAUDITED)
(Dollars in thousands)
For the Quarter
Ended March 31,
2010 2009
--------- ---------
Revenues
Federal Services $ 88,626 $ 66,081
Commercial Services 21,163 21,724
LP&D 52,687 46,004
International 323,414 303,300
--------- ---------
Total Revenues $ 485,890 $ 437,109
========= =========
Gross Profit and Margin
Federal Services $ 6,754 7.6% $ 8,969 13.6%
Commercial Services 3,683 17.4% 4,946 22.8%
LP&D 12,038 22.8% 13,986 30.4%
International Operations 20,228 6.3% 22,697 7.5%
--------- ---------
Total Gross Profit $ 42,703 8.8% $ 50,598 11.6%
========= =========
Income from Operations and
Margin
Federal Services $ 3,766 4.2% $ 5,616 8.5%
Commercial Services 1,981 9.4% 3,178 14.6%
LP&D 9,894 18.8% 11,763 25.6%
International 16,934 5.2% 18,508 6.1%
--------- ---------
Total income from operations
before corporate selling,
general and administrative
expenses and equity in income
of unconsolidated joint
ventures 32,575 6.7% 39,065 8.9%
Corporate selling, general and
administrative expenses (18,183) (19,246)
Equity in income of
unconsolidated joint ventures 2,363 963
--------- ---------
Total Income from Operations $ 16,755 3.4% $ 20,782 4.8%
========= =========
For more information, contact:
John Rasmussen
EnergySolutions, Inc.
(801) 649-2000
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