-- Revenues of $398.3 million
-- Non-cash goodwill impairment charge of $35.0 million
-- Net loss attributable to EnergySolutions of $28.5 million,
or $0.32 per share
-- Net income attributable to EnergySolutions of $6.5 million,
or $0.07 per share, excluding non-cash goodwill impairment charge
-- Net income attributable to EnergySolutions before non-cash impacts of
amortization of intangible assets and goodwill impairment charge of
$11.3 million, or $0.13 per share
-- EBITDA (excluding non-cash goodwill impairment charge) of $29.5 million
Second Quarter 2010 Results
Revenues for the second quarter of 2010 were $398.3 million, compared with
$373.6 million in the second quarter of 2009. Gross profit for the second
quarter of 2010 was $44.6 million, compared with $46.3 million for the
second quarter of 2009. Selling, general and administrative expenses for
the second quarter of 2010 were $30.8 million, compared with $30.3 million
for the second quarter of 2009. Net loss attributable to EnergySolutions
for the second quarter of 2010 was $28.5 million, or $0.32 per share,
compared with net income of $7.3 million, or $0.08 per share, for the
second quarter of 2009. Excluding a non-cash goodwill impairment charge,
the Company reported non-GAAP net income attributable to EnergySolutions of
$6.5 million, or $0.07 per share. As previously announced, the Company
recognized a non-cash goodwill impairment charge of $35.0 million during
the quarter ended June 30, 2010 related to its Federal Services reporting
unit.
Net income attributable to EnergySolutions before the non-cash impacts of
amortization of intangible assets and goodwill impairment charge for the
second quarter of 2010 was $11.3 million, or $0.13 per share, compared with
$12.5 million, or $0.14 per share, for the second quarter of 2009. EBITDA,
excluding the goodwill impairment charge, for the second quarter of 2010
was $29.5 million, compared with $29.6 million for the second quarter of
2009. Adjusted EBITDA for the second quarter of 2010 was $32.3 million,
compared with $32.9 million for the second 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 executed well in the quarter and were encouraged by the
year-over-year revenue growth in each of our operating segments. The most
significant driver of the revenue growth was a higher level of services and
waste disposal for Federal Government customers. We also continue to make
good progress on a number of items that are of significant strategic
importance to the Company, including adopting a more customer-focused
approach throughout the organization and developing our long-term
international strategy."
Business Segments -- Second 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 second quarter of 2010 were $93.0
million, compared with $74.7 million in the second 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 on 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 second quarter of 2010 was $5.1 million,
compared with $4.6 million for the second quarter of 2009. Operating
margin was 5.5% for the second quarter of 2010, compared to 6.2% for the
second quarter of 2009. Operating margin declined primarily due to
increased bid and proposal costs related to the East Tennessee Technology
Park proposal.
Equity in income of unconsolidated joint ventures was $3.9 million for the
second quarter of 2010, compared with $2.2 million for the second quarter
of 2009. This increase is primarily due to increased income from our
Washington River Protection Solutions joint venture at the Hanford site in
which we have a non-controlling interest.
Commercial Services
Commercial Services revenues for the second quarter of 2010 were $24.4
million, compared with $23.1 million for the second quarter of 2009. The
increase in revenues is primarily due to modest growth across most of the
segment's business lines, which was partially offset by reduced activity of
large components services due to completion of the Duke McGuire project in
late 2009.
Income from operations for the second quarter of 2010 was $4.1 million,
compared with $3.8 million in the second quarter of 2009. Operating margin
was 16.9% for the second quarter of 2010, compared to 16.4% for the second
quarter of 2009. The increase in operating margin was primarily due to
higher gross margins generated across most of the segment's business lines.
Logistics, Processing and Disposal
Logistics, Processing and Disposal revenues for the second quarter of 2010
were $66.3 million, compared to $61.6 million in the second quarter of
2009. The increase in revenues is primarily due to higher volumes of waste
disposed at the Clive, Utah facility from federal customers, as well as
higher revenues from transportation services.
Income from operations for the second quarter of 2010 was $20.8 million,
compared with $23.6 million for the second quarter of 2009. Operating
margin was 31.4% for the second quarter of 2010, compared to 38.4% for the
second quarter of 2009. The decrease in operating margin was primarily
attributable to a higher mix of transportation revenues and waste disposal
revenues from federal customers, as well as increased labor costs related
to safety enhancements at the Bear Creek facility.
International
International revenues for the second quarter of 2010 were $214.6 million,
compared to $214.1 million for the second quarter of 2009. Excluding the
effects of fluctuations in foreign currency exchange rates, International
revenues for the second quarter of 2010 increased $8.3 million over the
second quarter of 2009 mostly due to increased reimbursable contract cost
base from our Magnox contracts. International revenues were negatively
impacted by $7.8 million due to foreign currency fluctuations in the second
quarter of 2010.
Income from operations for the second quarter of 2010 was $0.6 million,
compared with $1.1 million for the second quarter of 2009. Operating
margin was 0.3% for the second quarter of 2010, compared to 0.5% for the
second quarter of 2009. The decrease in operating margin was primarily due
to lower efficiency fees recognized from the Company's Magnox contracts and
increased bid and proposal costs related to the Dounreay bid.
Balance Sheet
As previously announced, EnergySolutions intends to refinance its existing
credit facilities with borrowings under a new senior secured credit
facility and the proceeds of an offering of senior unsecured notes. The
new senior secured facility will include a term loan and a revolving credit
facility. A portion of the proceeds from the senior secured credit
facility will be held in a restricted cash account to provide for
cash-collateralized letters of credit. The refinancing is subject to
market and other conditions, and there can be no assurances that these
transactions will be consummated.
Outlook for 2010
EnergySolutions reaffirms that its EBITDA guidance will be between $140
million and $150 million for the year ending December 31, 2010. On July
12, 2010, EnergySolutions entered into an amendment to its existing credit
facilities to ensure that it remained in compliance with the financial
covenants in the credit facilities. Lenders agreed that the requirement
not to exceed a maximum first lien leverage ratio would not apply to the
quarter ended June 30, 2010. As a result of the amendment, the interest
rate on the Company's outstanding borrowings under the credit facilities is
expected to increase by approximately 2%. In addition, the Company
incurred fees of approximately $2.2 million, which will be amortized over
the expected remaining life of the facilities. As a result of the
increased interest expense and the goodwill impairment charge recognized in
the second quarter, the Company expects full year 2010 GAAP earnings per
share to range from $0.04 to $0.12 Excluding the non-cash goodwill
impairment charge, the Company expects 2010 earnings per share to range
from $0.44 to $0.52 and net income before the non-cash impact of the
amortization of intangible assets and goodwill impairment charge of $0.65
to $0.73 per share. The Company expects it effective tax rate to be in the
range of 20% to 22%.
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 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 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, 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 its most recent report on
Form 10-Q for the quarter ended March 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 2010 second quarter teleconference and webcast are
scheduled to begin at 10:00 a.m. EDT, on Thursday, August 5, 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)-700-6293 five
to ten minutes prior to the start time (to allow time for registration) and
reference the conference passcode 91195644. International callers should
dial (617)-213-8835 and enter the same passcode.
A replay of the call will be available on Thursday, August 5, 2010, at 1:00
p.m. EDT through Thursday, August 12, 2010 at 2:00 p.m. EDT. To access the
replay, dial (888)-286-8010 and enter passcode 15279523. 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-
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,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Revenues $ 398,339 $ 373,585 $ 884,229 $ 810,694
Cost of revenues (353,780) (327,257) (796,967) (713,768)
---------- ---------- ---------- ----------
Gross profit 44,559 46,328 87,262 96,926
Selling, general and
administrative expenses (30,837) (30,320) (59,148) (61,099)
Impairment of goodwill (35,000) - (35,000) -
Equity in income of
unconsolidated joint
ventures 3,850 2,163 6,213 3,125
---------- ---------- ---------- ----------
Income from operations (17,428) 18,171 (673) 38,952
Interest expense (9,866) (7,465) (18,542) (15,421)
Other income (expenses),
net 1,193 (669) 1,020 (898)
---------- ---------- ---------- ----------
Income before income
taxes and noncontrolling
interests (26,101) 10,037 (18,195) 22,633
Income tax expense (2,102) (2,351) (4,025) (6,625)
---------- ---------- ---------- ----------
Net income (28,203) 7,686 (22,220) 16,008
Less: Net income
attributable to
noncontrolling interests (302) (356) (453) (551)
---------- ---------- ---------- ----------
Net income attributable
to EnergySolutions $ (28,505) $ 7,330 $ (22,673) $ 15,457
========== ========== ========== ==========
Net income attributable
to EnergySolutions per
share:
Basic $ (0.32) $ 0.08 $ (0.26) $ 0.18
Diluted $ (0.32) $ 0.08 $ (0.26) $ 0.17
Number of shares used in
per share calculations:
Basic 88,510,294 88,305,674 88,464,943 88,305,674
Diluted 88,510,294 88,493,274 88,464,943 88,328,023
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
June 30, December 31,
ASSETS 2010 2009
----------- -----------
Current assets:
Cash and cash equivalents $ 33,738 $ 15,913
Accounts receivable, net of allowance for
doubtful accounts 291,171 260,380
Other current assets 169,552 153,213
----------- -----------
Total current assets 494,461 429,506
Property, plant & equipment, net 116,684 120,775
Goodwill 481,036 518,770
Other intangible assets,net 293,374 310,203
Other noncurrent assets 157,294 131,921
----------- -----------
Total assets $ 1,542,849 $ 1,511,175
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 51,580 $ 19,071
Accounts payable 106,112 110,247
Accrued expenses and other current liabilities 196,594 167,503
Other current liabilities 20,429 12,447
----------- -----------
Total current liabilities 374,715 309,268
Long-term debt, less current portion 480,218 505,040
Other noncurrent liabilities 216,562 196,705
----------- -----------
Total liabilities 1,071,495 1,011,013
----------- -----------
EnergySolutions stockholders' equity 470,080 499,045
Noncontrolling interests 1,274 1,117
----------- -----------
Total equity 471,354 500,162
----------- -----------
Total liabilities and equity $ 1,542,849 $ 1,511,175
=========== ===========
ENERGYSOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
For the Six Months
Ended June 30,
2010 2009
---------- ----------
Cash Provided by Operating Activities $ 21,848 $ 24,514
---------- ----------
Investing Activities
Purchases of property, plant and equipment (6,008) (8,226)
Purchases of intangible assets (661) (372)
Proceeds from disposition of property, plant
and equipment 44 -
---------- ----------
Cash Used in Investing Activities (6,625) (8,598)
---------- ----------
Financing Activities
Repayments of long-term debt (24,313) (11,744)
Net borrowings under revolving credit facility 32,000 -
Dividends to stockholders (4,425) (4,415)
Other items (4,630) (1,166)
---------- ----------
Cash Used in Financing Activities (1,368) (17,325)
---------- ----------
Effect of Exchange Rate on Cash 3,970 2,850
---------- ----------
Increase in Cash and Cash Equivalents $ 17,825 $ 1,441
========== ==========
Amortization of Intangible Assets $ 12,777 $ 13,907
========== ==========
Depreciation $ 10,618 $ 9,688
========== ==========
ENERGYSOLUTIONS, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)
(Dollars in thousands, except per share data)
For the Quarter For the Six Months
Ended June 30, Ended June 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Reconciliation of net income
(loss) attributable to
EnergySolutions to EBITDA
and Adusted EBITDA:
Net income (loss)
attributable to
EnergySolutions $ (28,505) $ 7,330 $ (22,673) $ 15,457
Interest expense 9,866 7,465 18,542 15,421
Interest rate collar loss
(gain) (727) 559 (883) 1,200
Income tax expense 2,102 2,351 4,025 6,625
Depreciation expense 5,397 4,991 10,618 9,688
Impairment of goodwill 35,000 - 35,000 -
Amortization of
intangible assets 6,341 6,953 12,777 13,907
---------- ---------- ---------- ----------
EBITDA 29,474 29,649 57,406 62,298
Accretion 219 406 438 775
Equity-based compensation 2,603 2,818 5,050 5,545
---------- ---------- ---------- ----------
ADJUSTED EBITDA $ 32,296 $ 32,873 $ 62,894 $ 68,618
========== ========== ========== ==========
Reconciliation of net income
(loss) attributable to
EnergySolutions to non-GAAP
net income attributable to
EnergySolutions:
Net income (loss)
attributable to
EnergySolutions $ (28,505) $ 7,330 $ (22,673) $ 15,457
Impairment of goodwill 35,000 - 35,000 -
---------- ---------- ---------- ----------
Non-GAAP net income
attributable to
EnergySolutions $ 6,495 $ 7,330 $ 12,327 $ 15,457
========== ========== ========== ==========
Non-GAAP net income
attributable to
EnergySolutions per
share:
Basic $ 0.07 $ 0.08 $ 0.14 $ 0.18
Diluted $ 0.07 $ 0.08 $ 0.14 $ 0.17
Number of shares used in
per share calculations:
Basic 88,510,294 88,305,674 88,464,943 88,305,674
Diluted 88,510,160 88,493,274 88,507,850 88,328,023
Reconciliation of net income
(loss) attributable to
EnergySolutions to net
income attributable to
EnergySolutions before the
non-cash impact of
amortization of intangible
assets and impairment of
goodwill:
Net income (loss)
attributable to
EnergySolutions $ (28,505) $ 7,330 $ (22,673) $ 15,457
Impairment of goodwill 35,000 - 35,000 -
Amortization of intangible
assets 6,341 6,953 12,777 13,907
Income tax expense related
to amortization of
intangible assets (1,550) (1,775) (3,145) (4,172)
---------- ---------- ---------- ----------
Net income attributable
to EnergySolutions
before the non-cash
impact of amortization
of intangible assets
and impairment of
goodwill $ 11,286 $ 12,508 $ 21,959 $ 25,192
========== ========== ========== ==========
Net income attributable to
EnergySolutions before the
non-cash impact of
amortization of intangible
assets and impairment of
goodwill per share:
Basic $ 0.13 $ 0.14 $ 0.25 $ 0.29
Diluted $ 0.13 $ 0.14 $ 0.25 $ 0.29
Number of shares used in per
share calculations:
Basic 88,510,294 88,305,674 88,464,943 88,305,674
Diluted 88,539,160 88,493,274 88,507,850 88,328,023
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.
The Company defines non-GAAP net income attributable to EnergySolutions as
net income (loss) attributable to EnergySolutions plus goodwill and
intangible impairment charges, net of the related income tax expense of
these items. The Company defines net income attributable to
EnergySolutions before the impacts of amortization of intangible assets and
impairment charges as net income attributable to EnergySolutions plus
amortization expense of intangible assets plus goodwill and intangible
impairment charges, net of the related income tax expense of each of these
items. 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 June 30,
2010 2009
--------- ---------
Revenues
Federal Services $ 93,044 $ 74,721
Commercial Services 24,379 23,106
LP&D 66,293 61,614
International 214,623 214,144
--------- ---------
Total Revenues $ 398,339 $ 373,585
========= =========
Gross Profit and Margin
Federal Services $ 9,336 10.0% $ 8,052 10.8%
Commercial Services 6,033 24.7% 5,644 24.4%
LP&D 22,752 34.3% 25,812 41.9%
International Operations 6,438 3.0% 6,820 3.2%
--------- ---------
Total Gross Profit $ 44,559 11.2% $ 46,328 12.4%
========= =========
Income from Operations and
Margin
Federal Services $ 5,103 5.5% $ 4,649 6.2%
Commercial Services 4,115 16.9% 3,782 16.4%
LP&D 20,849 31.4% 23,640 38.4%
International 611 0.3% 1,133 0.5%
--------- ---------
Total income from operations
before corporate selling,
general and administrative
expenses, impairment of
goodwill and equity in
income of unconsolidated
joint ventures 30,678 7.7% 33,204 8.9%
Corporate selling, general
and administrative expenses (16,956) (17,196)
Impairment of goodwill (35,000) -
Equity in income of
unconsolidated joint
ventures 3,850 2,163
--------- ---------
Total Income from Operations $ (17,428) -4.4% $ 18,171 4.9%
--------- ---------
For the Six Months Ended June 30,
2010 2009
--------- ---------
Revenues
Federal Services $ 181,670 $ 140,802
Commercial Services 45,542 44,830
LP&D 118,980 107,618
International 538,037 517,444
--------- ---------
Total Revenues $ 884,229 $ 810,694
========= =========
Gross Profit and Margin
Federal Services $ 16,090 8.9% $ 17,021 12.1%
Commercial Services 9,716 21.3% 10,590 23.6%
LP&D 34,790 29.2% 39,798 37.0%
International Operations 26,666 5.0% 29,517 5.7%
--------- ---------
Total Gross Profit $ 87,262 9.9% $ 96,926 12.0%
========= =========
Income from Operations and
Margin
Federal Services $ 8,869 4.9% $ 10,265 7.3%
Commercial Services 6,096 13.4% 6,960 15.5%
LP&D 30,743 25.8% 35,403 32.9%
International 17,545 3.3% 19,641 3.8%
--------- ---------
Total income from operations
before corporate selling,
general and administrative
expenses, impairment of
goodwill and equity in
income of unconsolidated
joint ventures 63,253 7.2% 72,269 8.9%
Corporate selling, general
and administrative expenses (35,139) (36,442)
Impairment of goodwill (35,000) -
Equity in income of
unconsolidated joint
ventures 6,213 3,125
--------- ---------
Total Income from Operations $ (673) -0.1% $ 38,952 4.8%
--------- ---------
Contact Information: For more information, please contact: John Rasmussen EnergySolutions, Inc. (801) 649-2000