SALT LAKE CITY, UT--(Marketwire - May 10, 2011) - EnergySolutions, Inc. (NYSE: ES) (the "Company"), a leading provider of specialized, technology-based nuclear services to government and commercial customers, announced financial results for the Company's first quarter ended March 31, 2011.
First Quarter 2011 Summary
-- Revenue of $522.3 million
-- Net income attributable to EnergySolutions of $9.9 million, or $0.11
per share
-- Net income attributable to EnergySolutions before non-cash impact of
amortization of intangible assets of $0.16 per share
-- EBITDA of $41.4 million
-- Adjusted EBITDA of $35.9 million
First Quarter 2011 Results
Revenue for the first quarter of 2011 totaled $522.3 million, compared with $485.9 million in the first quarter of 2010. Gross profit for the first quarter of 2011 was $46.6 million, compared with $45.2 million for the first quarter of 2010. Selling, general and administrative expenses for the first quarter of 2011 were $33.4 million, compared with $30.8 million for the first quarter of 2010.
Net income attributable to EnergySolutions for the first quarter of 2011 was $9.9 million, or $0.11 per share, compared with net income attributable to EnergySolutions of $5.8 million, or $0.07 per share, for the first quarter of 2010.
Net income attributable to EnergySolutions before the non-cash impact of amortization of intangible assets for the first quarter of 2011 was $14.2 million, or $0.16 per share, compared with net income attributable to EnergySolutions before the non-cash impact of amortization of intangible assets of $10.7 million, or $0.12 per share, for the first quarter of 2010.
Adjusted gross profit for the first quarter of 2011 totaled $54.6 million, compared with $45.4 million for the first quarter or 2010. Adjusted income from operations for the first quarter of 2011 was $22.6 million, compared with $17.0 million for the first quarter of 2010.
EBITDA and Adjusted EBITDA for the first quarter of 2011 were $41.4 million and $35.9 million, compared with $27.9 million and $30.6 million for the first quarter of 2010, respectively.
Selling, General, & Administrative expenses increased to $33.4 million, from $30.8 million in the first quarter of 2010. The increase was due primarily to higher Government and International bid and proposal expenses as well as to higher personnel related expenses incurred during the first quarter of 2011.
Reconciliations of GAAP to non-GAAP financial measures are provided in the attached Table 4.
Change in Reported Segments
In order to more accurately reflect the new operational structure of the Company, EnergySolutions has aligned its reporting segments within two principal business groups: the Government Group and the Global Commercial Group. The following quarterly financial discussion reflects the new alignment and prior year figures have been updated accordingly to produce year-over-year comparisons.
Business Segments -- First Quarter 2011
The results of the Company's two business groups are presented in Table 5 in the accompanying financial tables.
Government Group
Government Group revenue for the first quarter of 2011 totaled $79.4 million, compared with $88.6 million in the first quarter of 2010. The decrease in revenue was due primarily to decreased funding received during the first quarter of 2011 from the American Recovery and Reinvestment Act, to the completion of our contract to provide environmental remediation and waste management activities at a gaseous diffusion plant in Paducah, KY, and to reduced activity on our Isotek waste remediation project at the Oak Ridge National Laboratory.
Income from operations for the first quarter of 2011 was $1.9 million, compared with $3.8 million for the first quarter of 2010. Operating margin declined to 2.4% for the first quarter of 2011, compared to 4.2% for the first quarter of 2010 due primarily to increased bid and proposal costs.
Equity in income from unconsolidated joint ventures was $1.4 million for the first quarter of 2011, compared with $2.4 million for the first quarter of 2010. The decrease was due to decreased income from our joint venture for work at the DOE's Portsmouth, Ohio site, as well as to a decrease in income related to our Hanford Tank contract.
Global Commercial Group
Global Commercial Group revenue for the first quarter of 2011 totaled $442.9 million, compared with $397.3 million in the first quarter of 2010. The increase in revenue was due primarily to increased revenue from Commercial Services and International activities, as further discussed below.
Income from operations for the first quarter of 2011 was $29.4 million, compared with $28.8 million for the first quarter of 2010. Operating margin declined to 6.6% for the first quarter of 2011, compared to 7.3% for the first quarter of 2010 due primarily to lower margins in Commercial Services related to accretion expense, as well as to higher bid and proposal and personnel related expenses during the first quarter of 2011.
Commercial Services
Revenue from Commercial Services operations in our Global Commercial Group for the first quarter of 2011 totaled $46.5 million, compared with $20.2 million for the first quarter of 2010. The increase in revenue was due primarily to the ramp up of activity on our Zion license stewardship project, which was partially offset by lower revenues in non-utility commercial business.
Gross profit for the first quarter of 2011 was $2.4 million, compared with gross profit of $3.4 million in the first quarter of 2010. Gross margin was 5.2% for the first quarter of 2011, compared with 16.7% for the first quarter of 2010. The decrease in gross margin was due primarily to accretion expense related to our Zion Station asset retirement obligation, which was partially offset by increased margins on other commercial services activities.
Logistics, Processing and Disposal
Revenue from Logistics, Processing and Disposal ("LP&D") operations in our Global Commercial Group for the first quarter of 2011 totaled $54.3 million, compared to $51.8 million in the first quarter of 2010. The increase in revenue was due primarily to higher receipts of materials for processing at our Bear Creek facility, and to increased transportation service activity during the quarter. This increase was partially offset by lower revenue related to waste disposal at our Clive, Utah facility.
Gross profit for the first quarter of 2011 was $11.8 million, compared with $12.1 million for the first quarter of 2010. Gross margin declined slightly to 21.7% for the first quarter of 2011, compared with 23.3% for the first quarter of 2010. The decrease in gross margin was attributable primarily to a lesser percentage of revenue coming from waste disposal.
International
Revenue from International operations in our Global Commercial Group for the first quarter of 2011 totaled $342.1 million, compared to $325.2 million for the first quarter of 2010. Excluding the effects of fluctuations in foreign currency exchange rates, international operations revenue for the first quarter of 2011 increased $8.8 million over that of the first quarter of 2010 primarily as a result of increased revenue on our Magnox contracts, and to increased design and construction activities in our operations in Asia. International operations revenue was positively impacted by $8.1 million due to foreign currency fluctuations in the first quarter of 2011.
Gross profit for the first quarter of 2011 was $26.3 million, compared with $23.0 million for the first quarter of 2010. Gross margin increased to 7.7% for the first quarter of 2011, compared to 7.1% for the first quarter of 2010. The increase in gross margin was due primarily to higher efficiency fees recognized on our Magnox contracts.
Outlook
"We are pleased with our results for the first quarter of the year, and are on track to deliver solid performance for 2011 as we continue to develop growth opportunities in new strategic areas," said Val Christensen, President and Chief Executive Officer. "We are particularly pleased with our performance on our large Magnox and Zion contracts."
The Company continues to maintain its full year 2011 EBITDA expectations in the range of $130 to $140 million, with adjusted EBITDA in the range of $135 to $145 million.
Forward-Looking Statements
Statements in this earnings 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. Such forward-looking statements include statements regarding the Company's outlook for 2011, strategic initiatives, government projects and expectations for EBITDA and Adjusted EBITDA. 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 revenue 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, delay 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, 2010. The Company does not undertake any obligation to release publicly any revision to any of these forward-looking statements.
Conference Call Details
The EnergySolutions 2011 first quarter teleconference and webcast are scheduled to begin at 10:00 a.m. EDT, on Tuesday, May 10, 2011.
Hosting the call will be Val Christensen, President and Chief Executive Officer, and William Benz, Chief Financial Officer.
To participate in the event by telephone, please dial (800) 659-1966 five to ten minutes prior to the start time (to allow time for registration) and reference the conference passcode 63740619. International callers should dial (617) 614-2711 and provide the same passcode.
A replay of the call will be available on Tuesday, May 10, 2011, at 1:00 p.m. EDT through Tuesday, May 17, 2011 at 11:59 p.m. EDT. To access the replay, dial (888) 286-8010 and enter passcode 30915088. 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.
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(dollars in thousands, except per share amounts)
For the Quarter
Ended March 31,
2011 2010
---------- ----------
Revenue $ 522,267 $ 485,890
Cost of revenue (475,638) (440,719)
---------- ----------
Gross profit 46,629 45,171
Selling, general and administrative expenses (33,407) (30,779)
Equity in income of unconsolidated joint ventures 1,400 2,363
---------- ----------
Income from operations 14,622 16,755
Interest expense (18,050) (8,676)
Other income (expenses), net 15,428 (173)
---------- ----------
Income before income taxes and noncontrolling
interests 12,000 7,906
Income tax (expense) benefit (1,182) (1,922)
---------- ----------
Net income (loss) 10,818 5,984
Less: Net income attributable to noncontrolling
interests (909) (151)
---------- ----------
Net income (loss) attributable to
EnergySolutions $ 9,909 $ 5,833
========== ==========
Net income (loss) attributable to EnergySolutions
per share:
Basic $ 0.11 $ 0.07
Diluted $ 0.11 $ 0.07
Number of shares used in per share calculations:
Basic 88,709,078 88,415,309
Diluted 88,738,993 88,549,964
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands)
March 31, December 31,
ASSETS 2011 2010
----------- -----------
Current assets: (unaudited)
Cash and cash equivalents $ 69,574 $ 60,192
Accounts receivable, net of allowance for
doubtful accounts 372,432 294,972
Nuclear decommissioning trust fund
investments 113,336 110,328
Other current assets 218,401 220,116
----------- -----------
Total current assets 773,743 685,608
Property, plant & equipment, net 120,925 122,649
Goodwill 482,214 480,398
Other intangible assets, net 280,377 283,500
Nuclear decommissioning trust fund investments 686,575 694,754
Restricted cash and decontamination and
decommissioning deposits 336,021 338,408
Deferred Costs 616,139 650,270
Other noncurrent assets 182,487 169,912
----------- -----------
Total assets $ 3,478,481 $ 3,425,499
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 5,600 $ 5,600
Accounts payable 142,195 101,229
Accrued expenses and other current
liabilities 236,398 197,034
Facility and equipment decontamination and
decommissioning liabilities 113,336 110,328
Unearned revenue, current portion 121,699 117,802
----------- -----------
Total current liabilities 619,228 531,993
Long-term debt, less current portion 833,744 834,560
Facility and equipment decontamination and
decommissioning liabilities 679,204 711,419
Unearned revenue 620,380 654,643
Other noncurrent liabilities 230,565 214,346
----------- -----------
Total liabilities 2,983,121 2,946,961
----------- -----------
EnergySolutions stockholders' equity 491,549 475,636
Noncontrolling interests 3,811 2,902
----------- -----------
Total equity 495,360 478,538
----------- -----------
Total liabilities and equity $ 3,478,481 $ 3,425,499
=========== ===========
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(dollars in thousands)
For the Year Ended
March 31,
2011 2010
-------- --------
Cash Provided by Operating Activities $ 15,855 $ 39,202
-------- --------
Investing Activities
Purchases of property, plant and equipment (3,800) (2,027)
Purchase and sale of investments in nuclear
decommissioning trust fund 703 -
Purchases of intangible assets (330) -
Proceeds from sale of property, plant and equipment 82 -
-------- --------
Cash Used in Investing Activities (3,345) (2,027)
-------- --------
Financing Activities
Repayments of long-term debt (1,400) -
Dividends to stockholders - (2,213)
Other items (1) (2,940)
-------- --------
Cash Used in Financing Activities (1,401) (5,153)
-------- --------
Effect of Exchange Rate on Cash (1,727) (3,052)
-------- --------
Increase (Decrease) in Cash and Cash Equivalents $ 9,382 $ 28,970
======== ========
Amortization of Intangible Assets $ 6,558 $ 6,436
======== ========
Depreciation $ 5,699 $ 5,221
======== ========
ENERGYSOLUTIONS, INC.
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO ENERGYSOLUTIONS TO
EBITDA AND ADJUSTED EBITDA AND TO NET INCOME ATTRIBUTABLE TO
ENERGYSOLUTIONS BEFORE THE IMPACT OF AMORTIZATION OF INTANGIBLE ASSETS
(UNAUDITED)
RECONCILIATION OF GROSS PROFIT TO ADJUSTED GROSS PROFIT AND TO ADJUSTED
INCOME FROM OPERATIONS (UNAUDITED)
(dollars in thousands, except per share amounts)
For the Quarter
Ended March 31,
2011 2010
---------- ----------
Reconciliation of net income attributable to
EnergySolutions to EBITDA:
Net income attributable to EnergySolutions $ 9,909 $ 5,833
Interest expense 18,050 8,676
Interest rate swap (gain) - (156)
Income tax expense 1,182 1,922
Depreciation expense 5,699 5,221
Amortization of intangible assets 6,558 6,436
---------- ----------
EBITDA $ 41,398 $ 27,932
========== ==========
Accretion expense 7,981 219
Nuclear decommissioning trust fund earnings (15,673) -
Equity-based compensation 2,236 2,447
---------- ----------
Adjusted EBITDA $ 35,942 $ 30,598
========== ==========
Reconciliation of gross profit to adjusted gross
profit and to adjusted income from operations
Gross profit 46,629 45,171
Accretion expense 7,981 219
---------- ----------
Adjusted gross profit $ 54,610 $ 45,390
========== ==========
Operating expenses (32,007) (28,416)
---------- ----------
Adjusted income from operations $ 22,603 $ 16,974
Interest expense (18,050) (8,676)
Other income 15,428 (173)
Accretion expense (7,981) (219)
---------- ----------
Income before income taxes and noncontrolling
interests $ 12,000 $ 7,906
========== ==========
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 $ 9,909 $ 5,833
Amortization of intangible assets 6,558 6,436
Income tax expense related to amortization of
intangible assets (1) (2,295) (1,595)
---------- ----------
Net income attributable to EnergySolutions before
the impact of amortization of intangible assets $ 14,172 $ 10,674
========== ==========
Net income attributable to EnergySolutions before
the impact of amortization of intangible assets
per share:
Basic $ 0.16 $ 0.12
Diluted $ 0.16 $ 0.12
Number of shares used in per share calculations:
Basic 88,709,078 88,415,309
Diluted 88,738,993 88,549,964
(1) 2011 figure calculated using an assumed 35% tax rate
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, non-cash accretion expense, and net of nuclear decommissioning trust fund gains or losses. 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.
The Company defines Adjusted Gross Profit as gross profit plus accretion expense. The Company defines Adjusted Income from Operations as Adjusted Gross Profit less operating expenses, interest expense, and accretion, and plus other income. The Company uses Adjusted Gross Profit and Adjusted Income from Operations as indicators of its operating performance and for planning and forecasting future business operations. Adjusted Gross Profit and Adjusted Income from Operations, as presented in this release, are supplemental measures of the Company's performance that are not required by, or presented in accordance with, GAAP. They are not measures of the Company's financial performance under GAAP and should not be considered as alternatives to gross profit or any other performance measures derived in accordance with 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. These non-GAAP measures may be useful to investors seeking to compare the Company's 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. These measures should not be considered as substitutes for net income attributable to EnergySolutions, as determined in accordance with GAAP, and you should not consider them in isolation or as a substitute for analyzing the Company's results as reported under GAAP.
ENERGYSOLUTIONS, INC.
REPORTING SEGMENT INFORMATION (UNAUDITED)
(dollars in thousands)
For the Quarter Ended March 31,
2011 2010
--------- ---------
Revenue
Government Group $ 79,350 $ 88,626
Global Commercial Group
Commercial Services 46,537 20,240
LP&D 54,266 51,807
International 342,114 325,217
--------- ---------
Total Revenue $ 522,267 $ 485,890
========= =========
Gross Profit
Government Group $ 6,108 7.7% $ 6,754 7.6%
Global Commercial Group
Commercial Services 2,443 5.2% 3,371 16.7%
LP&D 11,802 21.7% 12,067 23.3%
International 26,276 7.7% 22,979 7.1%
--------- ---------
Total Gross Profit $ 46,629 8.9% $ 45,171 9.3%
========= =========
Income from Operations
Government Group $ 1,922 2.4% $ 3,766 4.2%
Global Commercial Group 29,365 6.6% 28,809 7.3%
--------- ---------
Total income from operations
before corporate selling,
general and administrative
expenses and equity in
income of unconsolidated
joint ventures 31,287 6.0% 32,575 6.7%
Corporate selling, general and
administrative expenses (18,065) (18,183)
Equity in income of
unconsolidated joint ventures 1,400 2,363
--------- ---------
Total Income from Operations $ 14,622 $ 16,755
========= =========
Contact Information: For more information, please contact: John Rasmussen EnergySolutions, Inc. (801) 649-2000