-- Revenues of $419.4 million
-- Net loss attributable to EnergySolutions of $20.4 million, or $(0.23)
per share
-- Net loss attributable to EnergySolutions before non-cash impact of
amortization of intangible assets of $(0.17) per share
-- EBITDA of $32.4 million
Third Quarter 2010 Results
Revenues for the third quarter of 2010 were $419.4 million, compared with
$364.9 million in the third quarter of 2009. Gross profit for the third
quarter of 2010 was $55.8 million, compared with $43.9 million for the
third quarter of 2009. Selling, general and administrative expenses for
the third quarter of 2010 were $38.2 million, compared with $25.6 million
for the third quarter of 2009. The Company's third quarter 2010 results
included a non-cash charge of $19.1 million related to the write-off of
accumulated deferred financing costs following the refinancing of the
Company's credit facilities.
Net loss attributable to EnergySolutions for the third quarter of 2010 was
$20.4 million, or ($0.23) per share, compared with net income attributable
to EnergySolutions of $12.9 million, or $0.15 per share, for the third
quarter of 2009.
Net loss attributable to EnergySolutions before the non-cash impact of
amortization of intangible assets for the third quarter of 2010 was $15.3
million, or $0.17 per share, compared with net income attributable to
EnergySolutions before the non-cash impact of amortization of intangible
assets of $17.6 million, or $0.20 per share, for the third quarter of 2009.
Income tax expense for the quarter included a valuation allowance of $8.6
million for certain domestic and foreign deferred tax assets.
EBITDA for the third quarter of 2010 was $32.4 million, compared with $31.8
million for the third quarter of 2009.
Reconciliations of GAAP to non-GAAP financial measures are provided in the
attached Table 4.
CEO Commentary
Commenting on the quarter, Val Christensen, EnergySolutions President and
CEO, said, "We experienced a strong level of business activity during the
quarter, with each of our operating segments generating year-over-year
revenue growth and higher consolidated EBITDA. The most significant
drivers of our overall revenue growth were increased disposal volumes at
our Clive facility from Federal Government customers and the recognition of
revenue related to our planning contract for the Zion license stewardship
project. We expect business activity to remain strong in the fourth
quarter of 2010.
"Over the course of the past few quarters, we have engaged in a
comprehensive review of the strategic positioning and opportunities of the
Company. During that time, we have taken a number of strategic steps to
better position the Company to compete in the markets we serve, including
the changes made this quarter in our capital structure, management and
dividend policy. The series of changes we have made reflect our assessment
of how we can best position our assets, experience, and expertise to
effectively pursue the growth opportunities in the markets we serve."
Business Segments -- Third Quarter 2010
The results of the Company's four business segments, on a GAAP basis, are
presented in Table 5 in the accompanying financial tables.
Federal Services
Federal Services revenues for the third quarter of 2010 were $81.2 million,
compared with $77.0 million in the third quarter of 2009. The increase in
revenues was 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 and increased subcontracting activity at a federal site in
Portsmouth, Ohio.
Income from operations for the third quarter of 2010 was $2.7 million,
compared with $5.9 million for the third quarter of 2009. Operating margin
was 3.3% for the third quarter of 2010, compared to 7.6% for the third
quarter of 2009. Operating margin declined primarily due to increased bid
and proposal expenses and an unfavorable shift in project mix, with
increased activity on lower margin contracts.
Equity in income of unconsolidated joint ventures was $4.0 million for the
third quarter of 2010, compared with $2.8 million for the third quarter of
2009. This increase was primarily due to increased income from the Hanford
Tank contract.
Commercial Services
Commercial Services revenues for the third quarter of 2010 were $45.7
million, compared with $21.3 million for the third quarter of 2009. The
increase in revenues was primarily due to recognition of the planning
contract revenue related to the Zion license stewardship project. Income
from operations for the third quarter of 2010 was $8.6 million, compared
with $4.7 million in the third quarter of 2009. Operating margin was 18.7%
for the third quarter of 2010, compared to 22.1% for the third 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 ("LP&D") revenues for the third quarter
of 2010 were $70.4 million, compared to $52.7 million in the third quarter
of 2009. The increase in revenues was primarily due to higher volumes of
waste disposed at the Clive, Utah facility from federal customers, as well
as higher revenues from the shipment of manufactured tubes.
Income from operations for the third quarter of 2010 was $28.5 million,
compared with $18.2 million for the third quarter of 2009. Operating
margin was 40.5% for the third quarter of 2010, compared to 34.5% for the
third quarter of 2009. The increase in operating margin was primarily
attributable to greater absorption of fixed costs at facilities within the
LP&D segment.
International
International revenues for the third quarter of 2010 were $222.1 million,
compared to $213.9 million for the third quarter of 2009. Excluding the
effects of fluctuations in foreign currency exchange rates, International
revenues for the third quarter of 2010 increased $20.2 million over the
third quarter of 2009 mostly due to increased reimbursable contract cost
base from our Magnox contracts. International revenues were negatively
impacted by $12.0 million due to foreign currency fluctuations in the third
quarter of 2010.
Income from operations for the third quarter of 2010 was $1.3 million,
compared with $3.6 million for the third quarter of 2009. Operating margin
was 0.6% for the third quarter of 2010, compared to 1.7% for the third
quarter of 2009. The decrease in operating margin was primarily due to
$2.2 million in increased amortization of intangible assets in the third
quarter of 2010 relative to the third quarter of 2009.
Outlook for the Fourth Quarter of 2010
For the fourth quarter of 2010, the Company expects EBITDA to range between
$50 million and $55 million, GAAP EPS to range between $0.18 and $0.20, and
net income before the non-cash impact of the amortization of intangibles to
range between $0.23 and $0.25 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 the importation of nuclear waste into the U.S. and the disposal
and storage of depleted uranium (d) the weakening of the pound sterling and
the related currency translation impact on our business if the currency
continues to weaken, (e) adverse public reaction 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, (j) failure to
obtain approval from the Securities and Exchange Commission of the
Company's proposed accounting treatment for the Zion license stewardship
transaction, and (k) 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.
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 third quarter teleconference and webcast are
scheduled to begin at 10:00 a.m. EST, on Tuesday, November 9, 2010.
Hosting the call will be Val Christensen, President and Chief Executive
Officer, and William Benz, Interim Chief Financial Officer.
To participate in the event by telephone, please dial (866) 700-7477 five
to ten minutes prior to the start time (to allow time for registration) and
reference the conference passcode 59663091. International callers should
dial (617) 213-8840 and enter the same passcode.
A replay of the call will be available on Tuesday, November 9, 2010, at
1:00 p.m. EST through Tuesday, November 16, 2010 at 11:59 p.m. EST. To
access the replay, dial (888) 286-8010 and enter passcode 10062417.
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 to follow-
We have made a formal submission to the Securities and Exchange Commission
("SEC") requesting pre-clearance of our proposed accounting treatment for
the Zion license stewardship project. There is no assurance the SEC will
concur with our proposed accounting treatment. Therefore, we may be
required to modify such accounting treatment which might have a material
impact on the tables presented below
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except per share data)
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
2010 2009 2010 2009
----------- ----------- ----------- -----------
Revenues $ 419,353 $ 364,853 $ 1,303,582 $ 1,175,547
Cost of revenues (363,600) (320,910) (1,160,567) (1,034,678)
----------- ----------- ----------- -----------
Gross profit 55,753 43,943 143,015 140,869
Selling, general and
administrative
expenses (38,195) (25,631) (97,342) (86,730)
Impairment of goodwill - - (35,000) -
Equity in income of
unconsolidated joint
ventures 3,952 2,819 10,165 5,945
----------- ----------- ----------- -----------
Income from
operations 21,510 21,131 20,838 60,084
Interest expense (33,831) (6,368) (52,374) (21,789)
Other income
(expenses), net 1,025 169 2,045 (730)
----------- ----------- ----------- -----------
Income before income
taxes and
noncontrolling
interests (11,296) 14,932 (29,491) 37,565
Income tax expense (8,319) (1,742) (12,344) (8,367)
----------- ----------- ----------- -----------
Net income (19,615) 13,190 (41,835) 29,198
Less: Net income
attributable to
noncontrolling
interests (735) (334) (1,188) (885)
----------- ----------- ----------- -----------
Net income
attributable to
EnergySolutions $ (20,350) $ 12,856 $ (43,023) $ 28,313
=========== =========== =========== ===========
Net income attributable
to EnergySolutions per
share:
Basic $ (0.23) $ 0.15 $ (0.49) $ 0.32
Diluted $ (0.23) $ 0.15 $ (0.49) $ 0.32
Number of shares used
in per share
calculations:
Basic 88,582,398 88,315,158 88,504,525 88,308,870
Diluted 88,582,398 88,557,831 88,504,525 88,390,569
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
September 30, December 31,
ASSETS 2010 2009
-------------- --------------
Current assets:
Cash and cash equivalents $ 89,621 $ 15,913
Accounts receivable, net of allowance for
doubtful accounts 268,949 260,380
Nuclear decommissioning trust fund
investments 90,399 -
Other current assets 142,180 153,213
-------------- --------------
Total current assets 591,149 429,506
Property, plant & equipment, net 119,405 120,775
Goodwill 483,434 518,770
Other intangible assets, net 291,166 310,203
Nuclear decommissioning trust fund
investments 739,928 -
Restricted cash and decontamination and
decommissioning deposits 338,812 24,273
Other noncurrent assets 153,892 107,648
-------------- --------------
Total assets $ 2,717,786 $ 1,511,175
============== ==============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,600 $ 19,071
Accounts payable 105,810 110,247
Accrued expenses and other current
liabilities 209,957 167,503
Facility and equipment decontamination and
decommissioning liabilities 87,957 -
Other current liabilities 29,504 12,447
-------------- --------------
Total current liabilities 438,828 309,268
Long-term debt, less current portion 835,408 505,040
Facility and equipment decontamination and
decommissioning liabilities 685,763 63,488
Other noncurrent liabilities 297,989 133,217
-------------- --------------
Total liabilities 2,257,988 1,011,013
-------------- --------------
EnergySolutions stockholders' equity 457,789 499,045
Noncontrolling interests 2,009 1,117
-------------- --------------
Total equity 459,798 500,162
-------------- --------------
Total liabilities and equity $ 2,717,786 $ 1,511,175
============== ==============
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
For the Nine Months
Ended September 30,
2010 2009
--------- ---------
Cash Provided by Operating Activities $ 126,175 $ 55,833
--------- ---------
Investing Activities
Purchases of property, plant and equipment (11,665) (15,059)
Purchase and sale of investments in nuclear
decommissioning trust fund (10,720) -
Purchases of intangible assets (845) (558)
Proceeds from disposition of property, plant and
equipment 143 22
--------- ---------
Cash Used in Investing Activities (23,087) (15,595)
--------- ---------
Financing Activities
Net proceeds from issuance of senior notes 296,070 -
Net proceeds from issuance of long-term debt 546,000 -
Retirement of long-term debt (524,111) -
Restricted cash held as collateral of letter of
credit obligations (315,479) -
Repayments of long-term debt (1,400) (47,646)
Dividends to stockholders (6,638) (6,623)
Other items (25,935) (12,243)
--------- ---------
Cash Used in Financing Activities (31,493) (66,512)
--------- ---------
Effect of Exchange Rate on Cash 2,113 (782)
--------- ---------
Increase (Decrease) in Cash and Cash Equivalents $ 73,708 $ (27,056)
========= =========
Amortization of Intangible Assets $ 19,227 $ 18,728
========= =========
Depreciation $ 14,527 $ 15,168
========= =========
ENERGYSOLUTIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands, except per share data)
For the Quarter Ended For the Nine Months
September 30, Ended September 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Reconciliation of net
income (loss) attributable
to EnergySolutions
to EBITDA and Adjusted
EBITDA:
Net income (loss)attributable
to EnergySolutions $ (20,350) $ 12,856 $ (43,023) $ 28,313
Interest expense 33,831 6,368 $ 52,374 21,789
Interest rate collar loss
(gain) (208) 514 $ (1,090) 1,714
Income tax expense 8,319 1,742 $ 12,344 8,367
Depreciation expense 4,346 5,480 $ 14,527 15,168
Impairment of goodwill - - $ 35,000 -
Amortization of intangible
assets 6,450 4,821 $ 19,227 18,728
---------- ---------- ---------- ----------
EBITDA 32,388 31,781 $ 89,358 94,079
Accretion 223 400 $ 661 1,175
Equity-based compensation 2,982 3,152 $ 8,032 8,697
---------- ---------- ---------- ----------
Adjusted EBITDA $ 35,593 $ 35,333 $ 98,051 $ 103,951
========== ========== ========== ==========
Reconciliation of net
income (loss) attributable
to EnergySolutions to
net income attributable to
EnergySolutions before
the non-cash impact of
amortization of intangible
assets:
Net income (loss)
attributable to
EnergySolutions $ (20,350) $ 12,856 $ (43,023) $ 28,313
Amortization of intangible
assets 6,450 4,821 $ 19,227 18,728
Income tax expense related
to amortization of
intangible assets (1,354) (100) $ (4,499) (4,272)
---------- ---------- ---------- ----------
Net income attributable
to EnergySolutions
before the non-cash
impact of amortization
of intangible assets $ (15,254) $ 17,577 $ (28,295) $ 42,769
========== ========== ========== ==========
Net income attributable to
EnergySolutions before the
non-cash impact of
amortization of intangible
assets:
Basic $ (0.17) $ 0.20 $ (0.32) $ 0.48
Diluted $ (0.17) $ 0.20 $ (0.32) $ 0.48
Number of shares used in
per share calculations:
Basic 88,582,398 88,315,158 88,504,525 88,308,870
Diluted 88,582,398 88,557,831 88,504,525 88,390,569
The Company defines EBITDA as net income (loss) attributable to
EnergySolutions plus interest expense (including the effects of interest
rate derivative agreements), income taxes, depreciation, impairment charges
and amortization. The Company defines Adjusted EBITDA as EBITDA plus
non-cash equity compensation expense and non-cash accretion expense. The
Company uses EBITDA and Adjusted EBITDA as key indicators of its operating
performance and for planning and forecasting future business operations.
EBITDA and Adjusted EBITDA, as presented in this release, are supplemental
measures of the Company's performance that are not required by, or
presented in accordance with, generally accepted accounting principles in
the United States ("GAAP"). They are not measures of the Company's
financial performance under GAAP and should not be considered as
alternatives to net income or any other performance measures derived in
accordance with GAAP or as alternatives to cash flow from operating
activities as measures of the Company's liquidity.
The Company's measurement of EBITDA and Adjusted EBITDA may not be
comparable to similarly titled measures of other companies. the Company has
included information concerning EBITDA and Adjusted EBITDA in this release
because they are used by management to measure operating performance and
because the Company believes that such information is often used by certain
investors as measures of a company's historical performance and for
modeling.
EBITDA and Adjusted EBITDA have limitations as analytical tools, and
investors should not consider them in isolation, or as a substitute for
analysis of the Company's operating results or cash flows as reported under
GAAP. Some of these limitations are:
-- They do not reflect the Company's cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
-- They do not reflect changes in, or cash requirements for, the
Company's working capital needs;
-- They do not reflect the significant interest expense or the cash
requirements necessary to service interest or principal payments on the
Company's debt;
-- Although depreciation is a non-cash charge, the assets being
depreciated will often have to be replaced in the future, and EBITDA
and Adjusted EBITDA do not reflect any cash requirements for such
replacements;
-- They are not adjusted for all non-cash income or expense items that are
reflected in the Company's statements of cash flows; and
-- Other companies in the Company's industry may calculate these measures
differently than the Company does, limiting their usefulness as
comparative measures.
Because of these limitations, EBITDA and Adjusted EBITDA should not be
considered as measures of discretionary cash available to the Company to
invest in the growth of its business. The Company compensates for these
limitations by relying primarily on its GAAP results and using EBITDA and
Adjusted EBITDA only for supplemental purposes.
ENERGYSOLUTIONS, INC.
REPORTING SEGMENT INFORMATION (UNAUDITED)
(Dollars in thousands)
For the Quarter Ended For the Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
-------- -------- ---------- ----------
Revenues
Federal
Services $ 81,158 $ 77,007 $ 262,828 $ 217,809
Commercial
Services 45,655 21,254 91,197 66,084
LP&D 70,417 52,681 189,397 160,299
Internation-
al 222,123 213,911 760,160 731,355
-------- -------- ---------- ----------
Total
Revenues $419,353 $364,853 $1,303,582 $1,175,547
======== ======== ========== ==========
Gross
Profit and
Margin
Federal
Services $ 8,037 9.9% $ 10,812 14.0% $ 24,127 9.2% $ 27,833 12.8%
Commercial
Services 9,894 21.7% 6,073 28.6% 19,610 21.5% 16,663 25.2%
LP&D 30,572 43.4% 19,505 37.0% 65,362 34.5% 59,303 37.0%
International
Operations 7,250 3.3% 7,553 3.5% 33,916 4.5% 37,070 5.1%
-------- -------- ---------- ----------
Total Gross
Profit $ 55,753 13.3% $ 43,943 12.0% $ 143,015 11.0% $ 140,869 12.0%
======== ======== ========== ==========
Income from
Operations
and Margin
Federal
Services $ 2,708 3.3% $ 5,871 7.6% $ 11,577 4.4% $ 16,136 7.4%
Commercial
Services 8,555 18.7% 4,699 22.1% 14,651 16.1% 11,659 17.6%
LP&D 28,543 40.5% 18,189 34.5% 59,286 31.3% 53,592 33.4%
Internation-
al 1,328 0.6% 3,631 1.7% 18,873 2.5% 23,272 3.2%
-------- -------- ---------- ----------
Total income
from
operations
before
corporate
selling,
general
and
administrative
expenses,
impairment
of goodwill
and equity
in income of
unconsoli-
dated
joint
ventures 41,134 9.8% 32,390 8.9% 104,387 8.0% 104,659 8.9%
Corporate
selling,
general
and
administra-
tive
expenses (23,576) (14,078) (58,714) (50,520)
Impairment
of
goodwill - - (35,000) -
Equity in
income of
unconsoli-
dated
joint
ventures 3,952 2,819 10,165 5,945
-------- -------- ---------- ----------
Total
Income
from
Operations $ 21,510 5.1% $ 21,131 5.8% $ 20,838 1.6% $ 60,084 5.1%
======== ======== ========== ==========
Contact Information: For more information, please contact: John Rasmussen EnergySolutions, Inc. (801) 649-2000