SOURCE: EnergySolutions, Inc.

August 11, 2008 06:00 ET

EnergySolutions Announces Second Quarter 2008 Results

Revenues of $460 Million; EBITDA of $41.9 Million; Net Income Before the Non-Cash Impact of Amortization of Intangible Assets of $17.2 Million, or $0.19 per Share

SALT LAKE CITY, UT--(Marketwire - August 11, 2008) - EnergySolutions, Inc. (NYSE: ES) ("EnergySolutions" or the "Company"), a leading provider of specialized, technology-based nuclear services to government and commercial customers, today announced financial results for the Company's second quarter ended June 30, 2008.

Second Quarter 2008 Results

Revenues for the quarter ended June 30, 2008 were $460 million, compared to $162 million for the same quarter in 2007. Gross profit was $61.1 million, compared to gross profit of $45.7 million for the quarter ended June 30, 2007. Selling, general and administrative expenses were $29.9 million, compared to $23.0 million in the same quarter of the prior year. Included in these expenses was $0.5 million related to the Company's secondary offering of 40.25 million shares, on behalf of its majority shareholder, which was completed in July. It is estimated that an additional $1.1 million of expenses related to the secondary offering will be incurred in the third quarter.

The Company generated cash flow from operations of $20.8 million during the quarter, which enabled it to repay $10 million of long-term debt. This repayment, together with the effect of lower interest rates and repayments of debt from the proceeds of the Company's initial public offering in November 2007, have contributed to the reduction of interest expense, which was $11.2 million in the second quarter of 2008, compared to $15.3 million in the same quarter of last year.

Net income for the quarter ended June 30, 2008 was $12.6 million, or $0.14 per diluted share, compared to $6.0 million for the same quarter a year ago. EBITDA during the quarter was $41.9 million, up from $32.3 million for the same quarter in the prior year, and net income before the non-cash impact of amortization of intangible assets was $17.2 million, or $0.19 per diluted share, based on 88.3 million fully diluted shares outstanding.

"In this, our second full quarter as a public company, I am very pleased with the performance of each of our business units and the progress each has made in executing our long-term strategic goals," said R Steve Creamer, the Company's Chief Executive Officer. "We had a strong second quarter, particularly in our international operations, where we exceeded our performance targets on our Magnox contracts in the United Kingdom, resulting in increased efficiency fees earned by the Company during the quarter."

Business Segments - Second Quarter 2008

The results of the Company's four business segments, on a GAAP basis, are presented in Table 5 in the accompanying schedules.

Federal Services revenues for the second quarter of 2008 were $73.1 million, up from revenues of $37.2 million in the same quarter last year. Segment income from operations for the second quarter of 2008 was $6.3 million, compared to $7.6 million in the same quarter last year. The operating margin was 8.6%, compared to 20.4% in the same quarter of last year. During the fourth quarter 2007 and the first quarter 2008, the Company, at the request of its customer, the Department of Energy, assumed voting control over two joint ventures. As a result, these joint ventures were consolidated this year, adding approximately $36.0 million to revenues during the second quarter at a lower operating margin.

Commercial Services revenues for the second quarter of 2008 were $26.2 million, compared to $38.6 million in the same quarter of last year. Segment income from operations was $6.2 million, up from $5.6 million in the same quarter last year. The operating margin was 23.8%, up from 14.4% in the same quarter last year. The improvement in the segment's income from operations was primarily due to increased revenues from the Company's spent fuel operations, which have higher margins, and decreased revenues from engineering projects, which have lower margins.

Logistics, Processing and Disposal revenues for the second quarter of 2008 were $63.0 million, compared to $69.3 million in the same quarter of last year. Segment income from operations was $22.7 million, compared to $26.0 million in the same quarter last year. The operating margin for the second quarter of 2008 was 36.0%, compared to 37.5% in the same quarter of last year. The decreased revenues were primarily the result of lower volumes of waste disposed by the Company's federal customers at its facility in Clive, Utah.

International revenues for the second quarter of 2008 were $298.0 million, compared to $16.7 million in the same quarter of last year. Segment income from operations was $13.8 million, compared to an operating loss of $2.0 million in the same quarter last year. The operating margin was 4.6% compared to a negative 11.7% in the same quarter of last year. The substantial increase in international revenues and segment operating income resulted from the acquisition of RSMC in June 2007. The operating profit for the quarter included $8.5 million of efficiency fees earned from its Magnox contracts.

Outlook for 2008

"Stronger than expected performance this quarter, together with accelerated performance of commercial service contracts during the first quarter, will level out our earnings between the first half and second half of the year," Mr. Creamer added. "This is contrary to our forecasts at the beginning of the year, when we expected greater sales and earnings in the second half. We still estimate our full year revenues should be in the range of $1.8 billion to $1.9 billion and earnings per share should be in the range of $0.69 to $0.74, excluding approximately $1.6 million of expenses related to the Company's secondary offering completed on July 31, 2008. We expect earnings per share before the impact of non-cash amortization of intangible assets should be in the range of $0.89 to $0.94, excluding offering expenses," concluded Mr. Creamer. When calculating per share amounts, the Company assumes a weighted-average fully diluted share count for the year of 89 million shares. EBITDA for the year ending December 31, 2008 is expected to be between $195 million and $205 million, excluding offering expenses. Amortization expense of intangible assets, net of related income tax expense, is expected to be $17.8 million. Compensation expense related to stock option grants is expected to be $9.1 million for 2008. Capital expenditures for the year are expected to be approximately $37 million, of which approximately $17 million relates to one-time purchases of equipment for the Company's Atlas mill tailings contract.

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 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.

Conference Call

The Company will conduct a conference call at 12:00 p.m. EDT on Monday, August 11, 2008, to discuss financial results for the second quarter ended June 30, 2008.

Hosting the call will be R Steve Creamer, Chairman and Chief Executive Officer, and Philip Strawbridge, Chief Financial Officer.

To participate in the event by telephone, please dial (866) 770-7125 five to ten minutes prior to the start time (to allow time for registration) and reference the conference passcode 26372089. International callers should dial (617) 213-8066 and use the same passcode.

A replay of the call will be available on Monday, August 11, 2008, at 2:00 p.m. EDT through Monday, August 18, 2008, at 2:00 pm EDT. To access the replay, dial (888) 286-8010 and enter passcode 59034960. 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

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.


Table 1

                           ENERGYSOLUTIONS, INC.
              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,
                               2008        2007        2008        2007
                            ----------  ----------  ----------  ----------

Revenues                    $  460,345  $  161,707  $  962,098  $  275,858
Cost of revenues               399,234     116,012     828,004     199,369
                            ----------  ----------  ----------  ----------

  Gross profit                  61,111      45,695     134,094      76,489

Selling, general and
 administrative expenses        29,921      23,012      58,511      51,340
                            ----------  ----------  ----------  ----------

  Income from operations        31,190      22,683      75,583      25,149

Interest expense               (11,179)    (15,341)    (22,839)    (30,711)
Other income (expenses), net       242         410      (1,819)        558
                            ----------  ----------  ----------  ----------

  Income (loss)  before
   minority interests and
   income taxes                 20,253       7,752      50,925      (5,004)

Minority interests                (505)          -        (700)          -
Income tax (expense) benefit    (7,153)     (1,760)    (18,337)        652
                            ----------  ----------  ----------  ----------

  Net income (loss)         $   12,595  $    5,992  $   31,888  $   (4,352)
                            ==========  ==========  ==========  ==========

Net income per share:
       Basic                $     0.14              $     0.36
       Diluted              $     0.14              $     0.36

Number of shares used in
 per share calculations:
       Basic                88,303,500              88,303,500
       Diluted              88,310,022              88,310,022



Table 2

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


ASSETS                                    June 30, 2008   December 31, 2007
                                         ----------------  ----------------
  Current assets:
    Cash and cash equivalents            $         42,242  $         36,366
    Accounts receivable, net of
     allowance for doubtful accounts              422,579           366,083
    Other current assets                          131,675           103,233
                                         ----------------  ----------------
      Total current assets                        596,496           505,682

  Property, plant & equipment, net                107,287           110,688
  Goodwill                                        526,333           526,040
  Other intangible assets, net                    370,293           383,812
  Other noncurrent assets                         127,778            98,728
                                         ----------------  ----------------

      Total assets                       $      1,728,187  $      1,624,950
                                         ================  ================

LIABILITIES & STOCKHOLDERS' EQUITY
  Current liabilities:
    Current portion of long-term debt    $          1,698  $          1,557
    Accounts payable                              187,082           155,663
    Accrued expenses and other current
     liabilities                                  269,251           233,588
    Other current liabilities                      49,918            45,135
                                         ----------------  ----------------
      Total current liabilities                   507,949           435,943

  Long-term debt, less current portion            575,270           605,410
  Other noncurrent liabilities                    205,658           178,206
                                         ----------------  ----------------

      Total liabilities                         1,288,877         1,219,559
                                         ----------------  ----------------

  Minority interests                                  899                68
  Commitments and contingencies

  Stockholders' equity                            438,411           405,323
                                         ----------------  ----------------

      Total liabilities and stockholders'
       equity                            $      1,728,187  $      1,624,950
                                         ================  ================



Table 3

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


                                     For the Quarter   For the Six Months
                                      Ended June 30,      Ended June 30,
                                      2008      2007      2008      2007
                                    --------  --------  --------  --------
Cash Provided by Operating
 Activities                         $ 20,767  $ 39,102  $ 46,431  $ 71,564
                                    --------  --------  --------  --------

Investing Activities
    Purchases of businesses,
     net of cash acquired                  -  (176,376)        -  (191,486)
    Purchases of property,
     plant and equipment              (4,400)   (1,789)   (5,680)   (3,532)
    Other items                           27         -        27         -
                                    --------  --------  --------  --------
Cash Used in Investing Activities     (4,373) (178,165)   (5,653) (195,018)
                                    --------  --------  --------  --------

Financing Activities
    Net borrowings (repayments) of
     long-term debt                  (10,000)  176,000   (30,000)  164,000
    Dividends/distributions to
     shareholders                     (2,207)   (6,264)   (4,415)   (8,897)
    Other items                         (607)   (7,312)   (1,134)  (10,148)
                                    --------  --------  --------  --------
Cash Provided by (Used in)
 Financing Activities                (12,814)  162,424   (35,549)  144,955
                                    --------  --------  --------  --------

Effect of Exchange Rate on Cash          576       174       647       240
                                    --------  --------  --------  --------

Increase in Cash and Cash
 Equivalents                        $  4,156  $ 23,535  $  5,876  $ 21,741
                                    ========  ========  ========  ========


Amortization of Intangible Assets   $  7,181  $  5,023  $ 14,378  $  9,826
                                    ========  ========  ========  ========
Depreciation                        $  4,436  $  4,530  $  9,057  $  9,101
                                    ========  ========  ========  ========



Table 4

                          ENERGYSOLUTIONS, INC.
   RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND NET INCOME (LOSS)
   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,
                                   2008       2007       2008       2007
                               ---------- ---------- ---------- ----------
Reconciliation of net income
 (loss) to EBITDA:
  Net income (loss)            $   12,595 $    5,992 $   31,888 $   (4,352)
  Interest expense                 11,179     15,341     22,839     30,711
  Interest rate swap loss (gain)     (629)      (308)     2,213        (38)
  Income tax expense (benefit)      7,153      1,760     18,337       (652)
  Depreciation expense              4,436      4,530      9,057      9,101
  Amortization of intangible
   assets                           7,181      5,023     14,378      9,826
                               ---------- ---------- ---------- ----------
     EBITDA                    $   41,915 $   32,338 $   98,712  $  44,596
                               ========== ========== ========== ==========


Reconciliation of net income
 (loss) to net income (loss)
 before the impact of
 amortization of intangible
 assets:
  Net income (loss)            $   12,595 $    5,992 $   31,888 $   (4,352)
  Amortization of intangible
   assets                            7,181      5,023     14,378     9,826
  Income tax expense related to
   amortization of intangible
   assets                          (2,608)    (1,140)    (5,249)    (1,280)
                               ---------- ---------- ---------- ----------
     Net income (loss) before
      the impact of
      amortization of
      intangible assets        $   17,168 $    9,875 $   41,017 $    4,194
                               ========== ========== ========== ==========

Net income before the impact of
 amortization of intangible
 assets per share:
     Basic                     $     0.19            $     0.46
     Diluted                   $     0.19            $     0.46

Number of shares used in per
 share calculations:
     Basic                     88,303,500            88,303,500
     Diluted                   88,310,022            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 it 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 impact of amortization of intangible assets as net income plus amortization expense of intangible assets, net of the related income tax expense of these items. Net income before the impact of amortization of intangible assets and net income 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 before the impact of amortization of intangible assets and net income before the impact of amortization of intangible assets 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 impact of amortization of intangible assets and net income 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 June 30,  For the Six Months Ended June 30,
              2008            2007            2008            2007
            --------        --------        --------        --------

Revenues
Federal
 Services   $ 73,124        $ 37,165        $117,711        $ 72,092
Commercial
 Services     26,225          38,606          56,820          63,947
LP&D          63,044          69,263         117,159         123,146
Inter-
 national    297,952          16,673         670,408          16,673
            --------        --------        --------        --------
Total
 Revenues   $460,345        $161,707        $962,098        $275,858
            ========        ========        ========        ========


Gross Profit
 and Margin
Federal
 Services   $  9,106  12.5% $ 10,678  28.7% $ 17,222  14.6% $ 19,350  26.8%
Commercial
 Services      7,985  30.4%    5,944  15.4%   19,565  34.4%   10,765  16.8%
LP&D          25,234  40.0%   28,096  40.6%   44,262  37.8%   45,397  36.9%
International
 Operations   18,786   6.3%      977   5.9%   53,045   7.9%      977   5.9%
            --------        --------        --------        --------
Total Gross                                 $
 Profit     $ 61,111  13.3% $ 45,695  28.3%  134,094  13.9% $ 76,489  27.7%
            ========        ========        ========        ========


Income from
 Operations
 and Margin
Federal
 Services   $  6,270   8.6% $  7,565  20.4% $ 12,618  10.7% $ 13,785  19.1%
Commercial
 Services      6,230  23.8%    5,563  14.4%   15,874  27.9%    5,624   8.8%
LP&D          22,665  36.0%   25,956  37.5%   38,989  33.3%   41,060  33.3%
Inter-
 national     13,823   4.6%  (1,959) -11.7%   43,928   6.6%  (1,959) -11.7%
            --------        --------        --------        --------
Total
 Income
 from
 Operations
 before
 corporate
 unallocated
 items        48,988  10.6%   37,125  23.0%  111,409  11.6%   58,510  21.2%
Corporate
 unallocated
 items       (17,798)        (14,442)        (35,826)        (33,361)
            --------        --------        --------        --------
Total
 Income
 from
 Operations $ 31,190        $ 22,683        $ 75,583        $ 25,149
            ========        ========        ========        ========

Contact Information

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    For more information, please contact:
    Tim Barney
    (801) 649-2233
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