-- GAAP EPS of $0.08 per share
-- Net income attributable to EnergySolutions before non-cash impact of
amortization of intangible assets of $12.5 million, or $0.14 per share
-- EBITDA of $29.6 million
-- Continued business wins and contract expansions
-- Completed transition to an independent Board of Directors
-- Strengthened balance sheet by paying down $30 million additional debt
subsequent to June 30th
Second Quarter 2009 Results
Revenues for the second quarter of 2009 were $373.6 million, compared with
$460.3 million in the second quarter of 2008. Gross profit for the second
quarter of 2009 was $46.3 million, compared with $62.0 million for the
second quarter of 2008. Selling, general and administrative expenses for
the second quarter of 2009 were $30.3 million, compared with $30.0 million
for the second quarter of 2008.
Net income attributable to EnergySolutions for the second quarter of 2009
was $7.3 million, or $0.08 per share, compared with $12.6 million, or $0.14
per share, for the second quarter of 2008. Net income attributable to
EnergySolutions before the non-cash impact of amortization of intangible
assets for the second quarter of 2009 was $12.5 million, or $0.14 per
share, compared with the second quarter of 2008 of $17.2 million, or $0.19
per share. EBITDA for the second quarter of 2009 was $29.6 million,
compared with $42.7 million for the second quarter of 2008.
CEO Commentary
Commenting on the quarter, Steve Creamer, EnergySolutions CEO said, "Each
of our segments continued to execute well during the quarter especially
considering the overall economic climate. Some of our commercial customers
continue to delay sizable investments in waste remediation, removal and
disposal. However, we expect most of this deferred work will eventually
flow through EnergySolutions as the economy strengthens, stimulus capital
is injected into the economy, and confidence improves."
"We are focused on generating business with new customers as well as
expanding opportunities with our base customers. As recent contract wins
affirm, EnergySolutions remains well positioned to compete on future bids.
We anticipate a gradual rebound in commercial business activity beginning
later this year and continuing into 2010. In the meantime, we are working
closely with our federal customers to expedite receipt and deployment of
economic stimulus capital. We are managing our business carefully to keep
our operating expenses in line with our near-term revenue opportunities,"
Mr. Creamer concluded.
Business Segments - Second Quarter 2009
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 second quarter of 2009 were $74.7
million, compared with $73.1 million in the second quarter of 2008.
Revenues increased $1.6 million as the Moab Atlas mill tailings project
ramped up to a higher level of operations. Some of this revenue increase
was offset by decreased revenue at one of our consolidated joint ventures
as a result of substantial completion of the construction phase of the
project.
Income from operations for the second quarter of 2009 was $4.6 million,
compared with $6.3 million for the second quarter of 2008. Operating margin
was 6.2% for the second quarter of 2009, compared to 8.6% for the second
quarter of 2008. Operating income and margin declined primarily due to
increased activity on lower margin contracts and decreased activity on
higher margin projects including the Savannah River and Hanford sites.
Commercial Services
Commercial Services revenues for the second quarter of 2009 were $23.1
million, compared with $26.2 million for the second quarter of 2008. Income
from operations for the second quarter of 2009 was $3.8 million, compared
with $6.2 million in the second quarter of 2008. Operating margin was 16.4%
for the second quarter of 2009, compared to 23.8% for the second quarter of
2008.
This decrease was attributable to lower revenues and gross profit in our
spent fuel operations due to the closure of the Barnwell disposal site to
customers outside the Atlantic Compact states in July 2008. Additionally,
the December 2008 completion of a major engineering and technology project,
as well as continued delays in industrial customer awards contributed to
this segment's lower results. These decreases were partially offset by
increased revenues and gross profit in our large components operations due
to the substantial work completed on our Duke McGuire project.
Logistics, Processing and Disposal
Logistics, Processing and Disposal revenues for the second quarter of 2009
were $61.6 million, compared to $63.0 million in the second quarter of
2008. Revenues related to transportation services decreased due to reduced
shipping. This was offset in part by increased revenues at the Clive, Utah
facility partly due to large component disposal from the Duke McGuire
project.
Income from operations for the second quarter of 2009 was $23.6 million,
compared with $23.5 million for the second quarter of 2008. Operating
margin was 38.4% for the second quarter of 2009, compared to 37.3% for the
second quarter of 2008.
International
Prior to the effects of fluctuations in foreign currency exchange rates,
International revenues for the second quarter of 2009 decreased by $19.5
million, compared with the second quarter of 2008, primarily due to a lower
reimbursable contract cost base of our Magnox contracts. International
revenues were also negatively impacted by $64.3 million due to foreign
currency fluctuations. As a result, on a GAAP basis, International revenues
for the second quarter of 2009 were $214.1 million, compared to $298.0
million for the second quarter of 2008.
Income from operations for the second quarter of 2009 was $1.1 million,
compared with $13.8 million for the second quarter of 2008. Operating
margin was 0.5% for the second quarter of 2009, compared to 4.6% for the
second quarter of 2008. The decline in operating income and margin was
primarily due to lower efficiency fees recognized from the Company's Magnox
contracts as well as foreign currency fluctuations.
Liquidity and Capital Resources
As of June 30, 2009, EnergySolutions had $49.9 million in cash, up from
$30.9 million at March 31, 2009, and $63.1 million of availability under
its $75 million revolving line of credit, up from $60.1 million at March
31, 2009. The Company paid down $1.7 million of debt during the second
quarter and an additional $30 million of debt subsequent to the quarter
end.
Second Quarter Highlights
New Business Wins
EnergySolutions continued to make progress in the second quarter and
announced a number of important new wins and increased funding on existing
projects ranging from a $19.2 million contract from URS Corporation to
clean up a U.S. Department of Energy (DOE) Separation Process Research Unit
test facility in upstate New York to the $84 million increased funding for
the Moab Atlas mill tailings project.
Further, contracts awarded by URS-led Savannah River Remediation, LLC will
provide funding of up to $56 million to clean up the DOE's Savannah River
Site, while a recent contract from Battelle Energy Alliance (BEA) to manage
waste produced by BEA's laboratory operations at the Idaho National
Laboratory site is scheduled to commence shortly and is valued at $19
million.
Additionally, last week the Company announced it has been awarded two
subcontracts at the Hanford Site Waste Treatment Plant for the support of
waste mix testing which, in aggregate, are valued at more than $15 million.
These contracts reflect continued strength in our government work and a
corresponding demand for EnergySolutions services.
Strengthened, Independent Board of Directors
To meet the highest standards of corporate governance, EnergySolutions
recently announced changes to its Board of Directors so that a majority of
its Board members are independent as defined by the NYSE. Its two recently
appointed new members of the Board are Clare Spottiswoode, from the United
Kingdom, and Dr. Pascal Colombani from France. Both are highly respected
experts in their fields of energy regulation, economics and technology.
They bring extensive contacts and invaluable strategic expertise to the
Company.
Outlook for 2009
Given mid-year visibility on 2009, and delays in the realization of
disposal revenue from Department of Energy stimulus funds, EnergySolutions'
revised 2009 EBITDA guidance is $155 million to $165 million. Previous
2009 GAAP EPS guidance of $0.50 to $0.60 per share and cash EPS (which
includes the non-cash impact of amortization on intangible assets) of $0.70
to $0.80 per share remains unchanged.
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)
deteriorating economic conditions globally, including the current financial
crisis and decreased credit availability for our customers, (b) the
weakening of the pound sterling and the related currency translation impact
on our business if the currency continues at present levels or continues to
weaken, (c) adverse public reaction that could lead to increased regulation
or limitations on our activities, (d) uncertainty regarding the impact on
our business of increased regulatory scrutiny of the nuclear waste industry
in the U.S. and U.K., (e) decisions by our customers to reduce or halt
their spending on nuclear services, (f) decisions by our commercial
customers to store radioactive materials on-site rather than dispose of
radioactive materials at one of our facilities, (g) the adverse impact of
the current financial conditions on the value of decommissioning trust
funds, and (h) 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, 2008 and its
most recent quarterly report on Form 10-Q for the quarter ended March 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 2009 second quarter teleconference and webcast are
scheduled to begin at 10:00 a.m. EDT, on Thursday, August 6, 2009.
Hosting the call will be Steve Creamer, Chairman and Chief Executive
Officer, and Philip Strawbridge, Chief Financial Officer.
To participate in the event by telephone, please dial (866) 825-3209 five
to ten minutes prior to the start time (to allow time for registration) and
reference the conference passcode 98446429. International callers should
dial (617) 213-8061 and enter the same passcode.
A replay of the call will be available on Thursday, August 6, at 1:00 p.m.
EDT through Thursday, August 13, 2009, at 2:00 pm EDT. To access the
replay, dial (888) 286-8010 and enter passcode 63069344. 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. To listen to the live call, please visit the web site
at least 15 minutes prior to the start of the call to register, download
and install any necessary audio software. 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 data)
For the Quarter For the Six Months
Ended June 30, Ended June 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues $ 373,585 $ 460,345 $ 810,694 $ 962,098
Cost of revenues 327,257 398,375 713,768 826,595
---------- ---------- ---------- ----------
Gross profit 46,328 61,970 96,926 135,503
Selling, general and
administrative expenses 30,320 30,025 61,099 58,287
---------- ---------- ---------- ----------
Income from operations 16,008 31,945 35,827 77,216
Interest expense (7,465) (11,934) (15,421) (24,472)
Other income (expenses),
net 1,494 242 2,227 (1,819)
---------- ---------- ---------- ----------
Income before income
taxes and noncontrolling
interests 10,037 20,253 22,633 50,925
Income tax expense (2,351) (7,153) (6,625) (18,337)
---------- ---------- ---------- ----------
Net income 7,686 13,100 16,008 32,588
Less: Net income
attributable to
noncontrolling interests (356) (505) (551) (700)
---------- ---------- ---------- ----------
Net income attributable
to EnergySolutions $ 7,330 $ 12,595 $ 15,457 $ 31,888
========== ========== ========== ==========
Net income attributable to
EnergySolutions per share:
Basic $ 0.08 $ 0.14 $ 0.18 $ 0.36
Diluted $ 0.08 $ 0.14 $ 0.17 $ 0.36
Number of shares used in
per share calculations:
Basic 88,305,674 88,303,500 88,305,674 88,303,500
Diluted 88,493,274 88,310,022 88,328,023 88,310,022
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
June 30, December 31,
ASSETS 2009 2008
------------ ------------
Current assets:
Cash and cash equivalents $ 49,889 $ 48,448
Accounts receivable, net of allowance for
doubtful accounts 322,088 213,037
Other current assets 119,094 129,772
------------ ------------
Total current assets 491,071 391,257
Property, plant & equipment, net 112,826 114,021
Goodwill 528,254 528,254
Other intangible assets,net 343,566 357,100
Other noncurrent assets 192,608 160,080
------------ ------------
Total assets $ 1,668,325 $ 1,550,712
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 8,831 $ 2,954
Accounts payable 121,172 89,513
Accrued expenses and other current
liabilities 224,367 177,439
Other current liabilities 22,226 28,801
------------ ------------
Total current liabilities 376,596 298,707
Long-term debt, less current portion 546,182 563,803
Other noncurrent liabilities 256,916 219,383
------------ ------------
Total liabilities 1,179,694 1,081,893
------------ ------------
EnergySolutions stockholders' equity 487,512 467,786
Noncontrolling interests 1,119 1,033
------------ ------------
Total equity 488,631 468,819
------------ ------------
Total liabilities and equity $ 1,668,325 $ 1,550,712
============ ============
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
For the Six Months Ended June 30,
2009 2008
---------------- ----------------
Cash Provided by Operating Activities $ 24,514 $ 46,431
---------------- ----------------
Investing Activities
Purchases of property, plant and
equipment (8,226) (5,680)
Purchases of intangible assets (372) -
Proceeds from sale of property,
plant and equipment - 27
---------------- ----------------
Cash Used in Investing Activities (8,598) (5,653)
---------------- ----------------
Financing Activities
Repayments of long-term debt (11,744) (30,000)
Dividends to stockholders (4,415) (4,415)
Other items (1,166) (1,134)
---------------- ----------------
Cash Used in Financing Activities (17,325) (35,549)
---------------- ----------------
Effect of Exchange Rate on Cash 2,850 647
---------------- ----------------
Increase (Decrease) in Cash and Cash
Equivalents $ 1,441 $ 5,876
================ ================
Amortization of Intangible Assets $ 13,907 $ 14,378
================ ================
Depreciation $ 9,688 $ 9,057
================ ================
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 For the Six Months
Ended June 30, Ended June 30,
2009 2008 2009 2008
---------- ---------- ---------- ----------
Reconciliation of net
income attributable to
EnergySolutions to EBITDA:
Net income attributable to
EnergySolutions $ 7,330 $ 12,595 $ 15,457 $ 31,888
Interest expense 7,465 11,934 15,421 24,472
Interest rate swap loss
(gain) 559 (629) 1,200 2,213
Income tax expense 2,351 7,153 6,625 18,337
Depreciation expense 4,991 4,436 9,688 9,057
Amortization of intangible
assets 6,953 7,181 13,907 14,378
---------- ---------- ---------- ----------
EBITDA $ 29,649 $ 42,670 $ 62,298 $ 100,345
========== ========== ========== ==========
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 $ 7,330 $ 12,595 $ 15,457 $ 31,888
Amortization of intangible
assets 6,953 7,181 13,907 14,378
Income tax expense related
to amortization of
intangible assets (1,775) (2,608) (4,172) (5,249)
---------- ---------- ---------- ----------
Net income attributable
to EnergySolutions
before the impact of
amortization of
intangible assets $ 12,508 $ 17,168 $ 25,192 $ 41,017
========== ========== ========== ==========
Net income attributable to
EnergySolutions before the
impact of amortization of
intangible assets per
share:
Basic $ 0.14 $ 0.19 $ 0.29 $ 0.46
Diluted $ 0.14 $ 0.19 $ 0.29 $ 0.46
Number of shares used in
per share calculations:
Basic 88,305,674 88,303,500 88,305,674 88,303,500
Diluted 88,493,274 88,310,022 88,328,023 88,310,022
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.
ENERGYSOLUTIONS, INC.
REPORTING SEGMENT INFORMATION (UNAUDITED)
(Dollars in thousands)
For the Quarter Ended For the Six Months ended
June 30, June 30,
2009 2008 2009 2008
-------- -------- -------- --------
Revenues
Federal
Services $ 74,721 $ 73,124 $140,802 $117,711
Commercial
Services 23,106 26,225 44,830 56,820
LP&D 61,614 63,044 107,618 117,159
Internatio-
nal 214,144 297,952 517,444 670,408
-------- -------- -------- --------
Total
Revenues $373,585 $460,345 $810,694 $962,098
======== ======== ======== ========
Gross
Profit and
Margin
Federal
Services $ 8,052 10.8% $ 9,106 12.5% $ 17,021 12.1% $ 17,222 14.6%
Commercial
Services 5,644 24.4% 7,985 30.4% 10,590 23.6% 19,565 34.4%
LP&D 25,812 41.9% 26,093 41.4% 39,798 37.0% 45,671 39.0%
Internatio-
nal Opera-
tions 6,820 3.2% 18,786 6.3% 29,517 5.7% 53,045 7.9%
-------- -------- -------- --------
Total Gross
Profit $ 46,328 12.4% $ 61,970 13.5% $ 96,926 12.0% $135,503 14.1%
======== ======== ======== ========
Income from
Operations
and Margin
Federal
Services $ 4,649 6.2% $ 6,270 8.6% $ 10,265 7.3% $ 12,618 10.7%
Commercial
Services 3,782 16.4% 6,230 23.8% 6,960 15.5% 15,874 27.9%
LP&D 23,640 38.4% 23,528 37.3% 35,403 32.9% 40,421 34.5%
Internatio-
nal 1,133 0.5% 13,823 4.6% 19,641 3.8% 43,928 6.6%
-------- -------- -------- --------
Total
Income
from
Operations
before
corporate
unallocat-
ed items 33,204 8.9% 49,851 10.8% 72,269 8.9% 112,841 11.7%
Corporate
unallocat-
ed items (17,196) (17,906) (36,442) (35,625)
-------- -------- -------- --------
Total
Income
from
Operations $ 16,008 $ 31,945 $ 35,827 $ 77,216
======== ======== ======== ========
Contact Information: For more information, please contact: John Rasmussen EnergySolutions, Inc. (801) 649-2000