SOURCE: EnergySolutions

October 14, 2008 00:11 ET

Accelerated Decommissioning Projects Delayed by Nation's Financial Crisis

SALT LAKE CITY, UT--(Marketwire - October 14, 2008) - The financial crisis that is impacting the United States and world markets will delay EnergySolutions' (NYSE: ES) ability to accelerate the decommissioning of identified nuclear power plant assets, a key growth initiative of the company.

The company is now estimating net income in the range of $0.50 to $0.60 per share, based on 88.3 million fully diluted shares outstanding. Net income before the non-cash impact of the amortization of intangibles is estimated to be in the range of $0.70 to $0.80 per share. Amortization expense of intangible assets is expected to be $28 million, or $18 million net of related income tax expense. The company estimates EBITDA for fiscal 2008 to be in the range of $165 million to $180 million. Estimates for net income before the non-cash impact of the amortization of intangible assets and for EBITDA exclude the costs of approximately $1.8 million from the secondary offering in July 2008 and any special charges. The company anticipates that the financial performance for fiscal 2009 to be similar to 2008. Further information will be provided in the company's third quarter earnings call in November.

The Nuclear Regulatory Commission (NRC), which maintains oversight for the use of decommissioning trust funds, informed EnergySolutions last week that it denied the company's petition for a rulemaking change that would allow the use of decommissioning trust funds for the processing and disposal of major radioactive components ("large components") that have been removed from operating nuclear reactors. The NRC indicated, however, that it would consider, on a case-by-case basis, exemptions from its guidance against using decommissioning trust funds for disposing of large components.

EnergySolutions will continue to work with the NRC and its nuclear utility customers to seek appropriate exemptions and pursue NRC rulemaking changes. The Commission has indicated that it believes that the early removal and disposal of large components is important and it will continue to work on alternative methods to accomplish this objective. EnergySolutions continues to explore other innovative funding options with a number of utilities to secure the decommissioning of these large components in the near future.

EnergySolutions and Exelon have an agreement under which EnergySolutions would accelerate the decommissioning of Exelon's Zion Nuclear Power Station in Zion, Illinois, which stopped operating in February 1998. The NRC approval for the transfer of the license from Exelon to the company's decommissioning subsidiary, ZionSolutions, is expected by mid-December.

However, EnergySolutions does not believe that it is in the best interests of its stakeholders to finalize the transfer of the Zion Nuclear Power Station assets until after the financial markets stabilize and the company reaffirms that there is sufficient value in the Zion decommissioning trust funds to ensure adequate funds for the accelerated decommissioning of the plant. Exelon officials have informed EnergySolutions that they are supportive of this strategy. Pursuant to their agreement, EnergySolutions and Exelon have until December 2009, to close the transaction. EnergySolutions remains committed to its license stewardship program.

"Despite the financial challenges that are impacting the United States and markets around the world, our base business is very solid and we continue to generate significant cash flow," said Steve Creamer, CEO and Chairman of EnergySolutions. "Our core customers, the governments of the United States and United Kingdom and the domestic nuclear industry, continue to require the unique services provided by EnergySolutions."

EnergySolutions offers customers a full range of integrated services and solutions including nuclear operations; decommissioning; nuclear materials management; processing, recycling and disposition of nuclear materials; environmental restoration; site closure; decontamination and research and engineering services across the nuclear fuel cycle.

Non-GAAP Measures

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, 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 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 before the non-cash impact of amortization of intangibles as net income plus amortization expense of intangible assets, net of the related income tax expense of these items. Net income before the non-cash impact of amortization of intangibles and net income before the non-cash impact of amortization of intangibles 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, management believes provides a more complete understanding of factors and trends affecting the company's business than GAAP measures alone. Net income before the non-cash impact of amortization of intangibles and net income before the non-cash impact of amortization of intangibles per share should not be considered as a substitute for net income or net income per share, as determined in accordance with GAAP. Net income before the non-cash impact of amortization of intangibles and net income before the non-cash impact of amortization of intangibles 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.

Forward-Looking Statements

Statements in this news release regarding future financial and operating results and any other statements about EnergySolutions, Inc.'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 economic conditions generally. 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, 2007 and the prospectus for its secondary offering, filed with the Securities and Exchange Commission on July 25, 2008. The company does not undertake any obligation to release publicly any revision to any of these forward-looking statements.

Contact Information

  • For more information please contact:
    Mark Walker
    801-649-2194
    Email Contact