SOURCE: EnergySolutions

EnergySolutions

November 04, 2009 18:21 ET

EnergySolutions Announces Third Quarter 2009 Results

SALT LAKE CITY, UT--(Marketwire - November 4, 2009) - EnergySolutions, Inc. (NYSE: ES), a leading provider of specialized, technology-based nuclear services to government and commercial customers, today announced financial results for the Company's third quarter ended September 30, 2009.

Q3 2009 Highlights

--  GAAP EPS of $0.15 per share
--  Net income attributable to EnergySolutions before non-cash impact of
    amortization of intangible assets of $17.6 million, or $0.20 per share
--  EBITDA of $31.8 million
--  Strengthened balance sheet by paying down $35.9 million in long-term
    debt
    

Third Quarter 2009 Results

Revenues for the third quarter of 2009 were $364.9 million, compared with $419.5 million in the third quarter of 2008. Gross profit for the third quarter of 2009 was $43.9 million, compared with $56.5 million for the third quarter of 2008. Selling, general and administrative expenses for the third quarter of 2009 were $25.6 million, compared with $30.7 million for the third quarter of 2008.

Net income attributable to EnergySolutions for the third quarter of 2009 was $12.9 million, or $0.15 per share, compared with $10.9 million, or $0.12 per share, for the third quarter of 2008. Net income attributable to EnergySolutions before the non-cash impact of amortization of intangible assets for the third quarter of 2009 was $17.6 million, or $0.20 per share, compared with the third quarter of 2008 of $15.6 million, or $0.18 per share. EBITDA for the third quarter of 2009 was $31.8 million, compared with $36.8 million for the third quarter of 2008. A reconciliation of EBITDA and of net income attributable to EnergySolutions before the non-cash impact of amortization of intangible assets to net income attributable to EnergySolutions is provided in the attached Table 4.

During the third quarter ended September 30, 2009, the Company determined that it had inappropriately applied authoritative guidance related to intangible assets and goodwill denominated in foreign currencies. As such, the Company recorded an entry during the quarter ended September 30, 2009 for $1.8 million to reduce amortization expense recorded in previous periods. Of this $1.8 million, $1.2 million related to the first and second quarters of 2009 and $0.6 million related to periods prior to 2009.

CEO Commentary

Commenting on the quarter, Steve Creamer, EnergySolutions CEO, said, "Our overall level of commercial business activity remained lower than normal as customers continued to remain cautious in moving forward on planned projects. In addition, projects funded by the American Recovery and Reinvestment Act continued to be slow in progressing. However, as commercial customers gain further confidence in the stability of the recovering economy and as more stimulus dollars are deployed, I am optimistic that we will see improving trends in 2010."

Business Segments - Third 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 third quarter of 2009 were $77.0 million, compared with $84.3 million in the third quarter of 2008. The decline in revenue is primarily attributable to lower revenue at one of the Company's consolidated joint ventures due to substantial completion of the construction phase of the project. This was partially offset by increased revenues at the Moab Atlas mill tailings project due a higher level of activity and increased revenues at the Isotek waste remediation project at the Oak Ridge National Laboratory.

Income from operations for the third quarter of 2009 was $5.9 million, compared with $10.9 million for the third quarter of 2008. Operating margin was 7.6% for the third quarter of 2009, compared to 12.9% for the third quarter of 2008. Operating margin declined primarily due to an unfavorable shift in project mix, with increased activity on lower margin contracts and decreased activity on higher margin projects including the Savannah River and Hanford sites. Operating margin also declined due to increased bid and contract proposal expenses incurred for the submission of bids on two large federal proposals.

The Company's proportional share of income from its joint ventures in which it has noncontrolling interests is included in Other Income and was $2.8 million for the third quarter of 2009, compared with $0.9 million for the third quarter of 2008. This increase was due to the Company's proportional share of income from its joint venture that won the Hanford Tank contract in July 2008.

Commercial Services

Commercial Services revenues for the third quarter of 2009 were $21.3 million, compared with $19.2 million for the third quarter of 2008. The increase in revenue is primarily due to large component operations related to the Duke McGuire project.

Income from operations for the third quarter of 2009 was $4.7 million, compared with $4.7 million in the third quarter of 2008. Operating margin was 22.1% for the third quarter of 2009, compared to 24.4% for the third quarter of 2008. The decline in operating margin is primarily due to lower margins on commercial decommissioning projects.

Logistics, Processing and Disposal

Logistics, Processing and Disposal revenues for the third quarter of 2009 were $52.7 million, compared to $66.2 million in the third quarter of 2008. The decline in revenue is primarily due to lower commercial waste volumes at the Clive, Utah facility, as well as decreased revenue from the Company's manufacturing operations, which had a significant shipment of product in the third quarter of 2008.

Income from operations for the third quarter of 2009 was $18.2 million, compared with $25.5 million for the third quarter of 2008. Operating margin was 34.5% for the third quarter of 2009, compared to 38.6% for the third quarter of 2008. The decline in operating margin is primarily due to lower gross margins at the Clive, Utah facility and in the Company's manufacturing operations.

International

Excluding the effects of fluctuations in foreign currency exchange rates, International revenues for the third quarter of 2009 decreased by $4.0 million, compared with the third quarter of 2008, primarily due to a lower reimbursable contract cost base of the Company's Magnox contracts. International revenues were also negatively impacted by $31.9 million due to foreign currency fluctuations. As a result, on a GAAP basis, International revenues for the third quarter of 2009 were $213.9 million, compared to $249.8 million for the third quarter of 2008.

Income from operations for the third quarter of 2009 was $3.6 million, compared with $3.3 million for the third quarter of 2008. Operating margin was 1.7% for the third quarter of 2009, compared to 1.3% for the third quarter of 2008. The increase in operating income and margin was primarily due to decreased amortization expense of intangible assets, which was partially offset by increased bid and proposal costs as well as foreign currency fluctuations.

Liquidity and Capital Resources

As of September 30, 2009, EnergySolutions had $21.4 million in cash and cash equivalents, and $63.1 million of availability under its $75 million revolving line of credit. The decline in cash and cash equivalents from the end of the prior quarter is primarily due to cash utilized to pay down long-term debt by approximately $35.9 million during the third quarter of 2009.

Outlook for 2009

Given the year-to-date results, a revised expectation of no additional large component project in 2009, and the continued slow pace of projects funded by the American Recovery and Reinvestment Act, EnergySolutions' revised 2009 EBITDA guidance is $145 million to $150 million. Previous 2009 GAAP EPS guidance of $0.50 to $0.60 per share and of net income before the non-cash impact of the amortization of intangibles 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 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 current or future 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 June 30, 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 third quarter teleconference and webcast are scheduled to begin at 10:00 a.m. EST, on Thursday, November 5, 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 (800) 573-4842 five to ten minutes prior to the start time (to allow time for registration) and reference the conference passcode 61884244. International callers should dial (617) 224-4327 and enter the same passcode.

A replay of the call will be available on Thursday, November 5, at 1:00 p.m. EST through Thursday, November 12, 2009. To access the replay, dial (888) 286-8010 and enter passcode 54942792. 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 is a global leader in nuclear waste management, remediation, and disposal. The Company 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.

Table 1

                          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,
                           2009         2008         2009         2008
                        -----------  -----------  -----------  -----------

Revenues                $   364,853  $   419,453  $ 1,175,547  $ 1,381,551
Cost of revenues            320,910      362,962    1,034,678    1,189,557
                        -----------  -----------  -----------  -----------

  Gross profit               43,943       56,491      140,869      191,994

Selling, general and
 administrative
 expenses                    25,631       30,705       86,730       88,992
                        -----------  -----------  -----------  -----------

  Income from
   operations                18,312       25,786       54,139      103,002

Interest expense             (6,368)      (9,778)     (21,789)     (34,250)
Other income
 (expenses), net              2,988          (72)       5,215       (1,891)
                        -----------  -----------  -----------  -----------

  Income before income
   taxes and
   noncontrolling
   interests                 14,932       15,936       37,565       66,861

Income tax expense           (1,742)      (4,827)      (8,367)     (23,164)
                        -----------  -----------  -----------  -----------

  Net income                 13,190       11,109       29,198       43,697

Less: Net income
 attributable to
 noncontrolling
 interests                     (334)        (207)        (885)        (907)
                        -----------  -----------  -----------  -----------

  Net income
   attributable to
   EnergySolutions      $    12,856  $    10,902  $    28,313  $    42,790
                        ===========  ===========  ===========  ===========

Net income attributable
 to EnergySolutions per
 share:
  Basic                 $      0.15  $      0.12  $      0.32  $      0.48
  Diluted               $      0.15  $      0.12  $      0.32  $      0.48

Number of shares used
 in per share
 calculations:
  Basic                  88,315,158   88,303,500   88,308,870   88,303,500
  Diluted                88,557,831   88,312,311   88,390,569   88,310,791

Table 2

                          ENERGYSOLUTIONS, INC.
            CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                          (Dollars in thousands)


                                                September 30, December 31,
ASSETS                                              2009          2008
                                                ------------- -------------
  Current assets:
    Cash and cash equivalents                   $      21,392 $      48,448
    Accounts receivable, net of allowance for
     doubtful accounts                                275,239       213,037
    Other current assets                              120,301       129,772
                                                ------------- -------------
      Total current assets                            416,932       391,257

  Property, plant & equipment, net                    115,047       114,021
  Goodwill                                            518,751       528,254
  Other intangible assets,net                         326,316       357,100
  Other noncurrent assets                             207,512       160,080
                                                ------------- -------------

      Total assets                              $   1,584,558 $   1,550,712
                                                ============= =============

LIABILITIES & STOCKHOLDERS' EQUITY
  Current liabilities:
    Current portion of long-term debt           $       1,392 $       2,954
    Accounts payable                                  117,917        89,513
    Accrued expenses and other current
     liabilities                                      178,021       177,439
    Other current liabilities                          22,370        28,801
                                                ------------- -------------
      Total current liabilities                       319,700       298,707

  Long-term debt, less current portion                517,719       563,803
  Other noncurrent liabilities                        266,782       219,383
                                                ------------- -------------

      Total liabilities                             1,104,201     1,081,893
                                                ------------- -------------

  EnergySolutions stockholders' equity                479,210       467,786
  Noncontrolling interests                              1,147         1,033
                                                ------------- -------------

      Total equity                                    480,357       468,819
                                                ------------- -------------

      Total liabilities and equity              $   1,584,558 $   1,550,712
                                                ============= =============

Table 3

                          ENERGYSOLUTIONS, INC.
        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                          (Dollars in thousands)


                                                For the Nine Months Ended
                                                      September 30,
                                                    2009          2008
                                                ------------  ------------

Cash Provided by Operating Activities           $     55,833  $     86,973
                                                ------------  ------------

Investing Activities
  Purchases of property, plant and equipment         (15,059)       (9,731)
  Purchases of intangible assets                        (558)         (351)
  Proceeds from sale of property, plant and
   equipment                                              22            33
                                                ------------  ------------
Cash Used in Investing Activities                    (15,595)      (10,049)
                                                ------------  ------------

Financing Activities
  Repayments of long-term debt                       (47,646)      (30,210)
  Dividends to stockholders                           (6,623)       (6,623)
  Other items                                        (12,243)       (9,649)
                                                ------------  ------------
Cash Used in Financing Activities                    (66,512)      (46,482)
                                                ------------  ------------

Effect of Exchange Rate on Cash                         (782)       (6,908)
                                                ------------  ------------

Increase (Decrease) in Cash and Cash
 Equivalents                                    $    (27,056) $     23,534
                                                ============  ============


Amortization of Intangible Assets               $     18,728  $     21,308
                                                ============  ============
Depreciation                                    $     15,168  $     13,380
                                                ============  ============

Table 4

                          ENERGYSOLUTIONS, INC.
      RECONCILIATION OF NET INCOME ATTRIBUTABLE TO ENERGYSOLUTIONS TO
      EBITDA AND TO NET INCOME ATTRIBUTABLE TO ENERGYSOLUTIONS BEFORE
        THE IMPACT OF AMORTIZATION OF INTANGIBLE ASSETS (UNAUDITED)
              (Dollars in thousands, except per share data)


                               For the Quarter        For the Nine Months
                              Ended September 30,     Ended September 30,
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------

Reconciliation of net
 income attributable to
 EnergySolutions to EBITDA:
  Net income attributable
   to EnergySolutions       $   12,856  $   10,902  $   28,313  $   42,790
  Interest expense               6,368       9,778      21,789      34,250
  Interest rate swap loss
   (gain)                          514          10       1,714       2,223
  Income tax expense             1,742       4,827       8,367      23,164
  Depreciation expense           5,480       4,323      15,168      13,380
  Amortization of
   intangible assets             4,821       6,930      18,728      21,308
                            ----------  ----------  ----------  ----------
    EBITDA                  $   31,781  $   36,770  $   94,079  $  137,115
                            ==========  ==========  ==========  ==========

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       $   12,856  $   10,902  $   28,313  $   42,790
  Amortization of
   intangible assets             4,821       6,930      18,728      21,308
  Income tax expense
   related to amortization
   of intangible assets           (100)     (2,235)     (4,272)     (7,484)
                            ----------  ----------  ----------  ----------
    Net income attributable
     to EnergySolutions
     before the impact of
     amortization of
     intangible assets      $   17,577  $   15,597  $   42,769  $   56,614
                            ==========  ==========  ==========  ==========


Net income attributable to
 EnergySolutions before the
 impact of amortization of
 intangible assets per share:
    Basic                   $     0.20  $     0.18  $     0.48  $     0.64
    Diluted                 $     0.20  $     0.18  $     0.48  $     0.64

Number of shares used in
 per share calculations:
    Basic                   88,315,158  88,303,500  88,308,870  88,303,500
    Diluted                 88,557,831  88,312,311  88,390,569  88,310,791

The Company defines EBITDA as earnings before interest expense, income taxes, depreciation and amortization. The Company uses EBITDA to facilitate a comparison of its operating performance on a consistent basis from period to period that, when viewed with its GAAP results and the above reconciliation, management believes provides a more complete understanding of factors and trends affecting its business than GAAP measures alone. EBITDA assists management in comparing its operating performance on a consistent basis because it removes the impact of its capital structure (primarily interest charges), asset base (primarily depreciation and amortization) and items outside the control of its management team (taxes) from its results of operations. EBITDA should not be considered as a substitute for net income attributable to EnergySolutions or income from operations, as determined in accordance with GAAP. EBITDA is not defined by GAAP, and you should not consider it in isolation or as a substitute for analyzing the Company's results as reported under GAAP.

The Company defines net income attributable to EnergySolutions before the impact of amortization of intangible assets as net income attributable to EnergySolutions plus amortization expense of intangible assets, net of the related income tax expense of these items. Net income attributable to EnergySolutions before the impact of amortization of intangible assets and net income attributable to EnergySolutions before the impact of amortization of intangible assets per share are not computed in accordance with GAAP. These non-GAAP measures may be useful to investors seeking to compare the operating performance on a consistent basis from period to period that, when viewed with its GAAP results and the above reconciliation, management believes provides a more complete understanding of factors and trends affecting the Company's business than GAAP measures alone. Net income attributable to EnergySolutions before the impact of amortization of intangible assets and net income attributable to EnergySolutions before the impact of amortization of intangible assets per share should not be considered as a substitute for net income attributable to EnergySolutions or net income attributable to EnergySolutions per share, as determined in accordance with GAAP. Net income attributable to EnergySolutions before the impact of amortization of intangible assets and net income attributable to EnergySolutions before the impact of amortization of intangible assets per share are not defined by GAAP, and you should not consider them in isolation or as a substitute for analyzing the Company's results as reported under GAAP.

Table 5

                          ENERGYSOLUTIONS, INC.
                REPORTING SEGMENT INFORMATION (UNAUDITED)
                          (Dollars in thousands)


                                    For the Quarter Ended September 30,
                                         2009               2008
                                      ----------         ----------

Revenues
Federal Services                      $   77,007         $   84,346
Commercial Services                       21,254             19,175
LP&D                                      52,681             66,159
International                            213,911            249,773
                                      ----------         ----------
Total Revenues                        $  364,853         $  419,453
                                      ==========         ==========


Gross Profit and Margin
Federal Services                      $   10,812   14.0% $   13,269   15.7%
Commercial Services                        6,073   28.6%      6,512   34.0%
LP&D                                      19,505   37.0%     28,175   42.6%
International Operations                   7,553    3.5%      8,535    3.4%
                                      ----------         ----------
Total Gross Profit                    $   43,943   12.0% $   56,491   13.5%
                                      ==========         ==========


Income from Operations and Margin
Federal Services                      $    5,871    7.6% $   10,851   12.9%
Commercial Services                        4,699   22.1%      4,688   24.4%
LP&D                                      18,189   34.5%     25,519   38.6%
International                              3,631    1.7%      3,330    1.3%
                                      ----------         ----------
Total Income from Operations before
 corporate unallocated items              32,390    8.9%     44,388   10.6%
Corporate unallocated items              (14,078)           (18,602)
                                      ----------         ----------
Total Income from Operations          $   18,312         $   25,786
                                      ==========         ==========



                                  For the Nine Months Ended September 30,
                                          2009               2008
                                      -----------        -----------

Revenues
Federal Services                      $   217,809        $   202,057
Commercial Services                        66,084             75,995
LP&D                                      160,299            183,318
International                             731,355            920,181
                                      -----------        -----------
Total Revenues                        $ 1,175,547        $ 1,381,551
                                      ===========        ===========


Gross Profit and Margin
Federal Services                      $    27,833  12.8% $    30,491  15.1%
Commercial Services                        16,663  25.2%      26,077  34.3%
LP&D                                       59,303  37.0%      73,846  40.3%
International Operations                   37,070   5.1%      61,580   6.7%
                                      -----------        -----------
Total Gross Profit                    $   140,869  12.0% $   191,994  13.9%
                                      ===========        ===========


Income from Operations and Margin
Federal Services                      $    16,136   7.4% $    23,469  11.6%
Commercial Services                        11,659  17.6%      20,562  27.1%
LP&D                                       53,592  33.4%      65,940  36.0%
International                              23,272   3.2%      47,258   5.1%
                                      -----------        -----------
Total Income from Operations before
 corporate unallocated items              104,659   8.9%     157,229  11.4%
Corporate unallocated items               (50,520)           (54,227)
                                      -----------        -----------
Total Income from Operations          $    54,139        $   103,002
                                      ===========        ===========

Contact Information

  • For more information, please contact:

    John Rasmussen
    EnergySolutions, Inc.
    (801) 649-2000
    Email Contact