EX-99.1 2 a12-26371_1ex99d1.htm EX-99.1

 

Exhibit 99.1

 

EnergySolutions Announces Third Quarter 2012 Financial Results

 

SALT LAKE CITY, UT — (MARKET WIRE) — November 8, 2012 — EnergySolutions, Inc. (NYSE: ES - the “Company”), a leading provider of specialized, technology-based nuclear services, announced financial results for the third quarter ended September 30, 2012.

 

Third Quarter 2012 Summary

 

·                  Revenue of $444.2 million

·                  Net income attributable to EnergySolutions of $10.1 million, or $0.11 per share

·                  Adjusted EBITDA of $42.7 million

 

Third Quarter 2012 Results

 

Revenue for the third quarter of 2012 increased to $444.2 million, compared with revenue of $421.0 million in the third quarter of 2011.  Net income attributable to EnergySolutions for the third quarter of 2012 was $10.1 million, or $0.11 per share, compared to a net loss attributable to EnergySolutions of $3.8 million, or $0.04 per share, for the third quarter of 2011.

 

Gross profit increased to $46.2 million, compared with $37.1 million for the third quarter of 2011, primarily as a result of the ramp up of projects in Asia.  Selling, general, and administrative expenses decreased slightly to $31.8 million, from $32.2 million in the third quarter of 2011and included $3.3 million of restructuring charges in the third quarter of 2012.

 

EBITDA and Adjusted EBITDA were $42.4 million and $42.7 million, respectively, compared with $23.5 million and $36.0 million, respectively, for the third quarter of 2011.  Adjusted EBITDA in the quarter excludes $10.7 million of restructuring and other non-recurring charges which include severance costs, legal settlements and other real estate transactions. Reconciliations of GAAP to non-GAAP financial measures are provided in the attached Table 4.

 

Business Segments — Third Quarter 2012

 

The results of the Company’s two business groups are presented in Table 5 in the accompanying financial tables.

 

Global Commercial Group

 

Global Commercial Group revenue for the third quarter totaled $400.2 million, compared with $369.3 million in the third quarter of 2011.  The $30.9 million increase in revenue was due primarily to growth from International activities primarily in Asia, partially off-set by declines in disposal operations as discussed below.

 

Global Commercial Group income from operations for the third quarter of 2012 totaled $26.2 million, compared with $18.3 million for the third quarter of 2011.  Operating margins increased to 6.5% for the third quarter of 2012, compared to 5.0% for the third quarter of 2011 due primarily to higher revenue and earnings on projects in Asia.

 

Commercial Services

 

Within the Global Commercial Group, revenue from Commercial Services for the third quarter of 2012 totaled $48.6 million, compared with $47.1 million for the third quarter of 2011.  The increase in revenue was due primarily to new support work in utility services.

 

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Gross profit for the third quarter of 2012 increased $3.8 million to $4.7 million, compared with gross profit of $0.9 million in the third quarter of 2011, primarily as a result of higher ARO gain and lower accretion expense associated with the Zion project. Gross margin was 9.8% for the third quarter of 2012, compared with 1.9% for the third quarter of 2011.

 

Logistics, Processing and Disposal

 

Revenue from the Logistics, Processing and Disposal (“LP&D”) operations for the third quarter totaled $62.4 million, compared to $64.7 million in the third quarter of 2011.  The decrease in revenue was due primarily to lower waste disposal volumes from U.S. Department of Energy (“DOE”) projects due in part to a decrease in government stimulus funding and commercial customers, partially offset by increased processing and logistics revenue. Gross profit and gross margin for the third quarter of 2012 were $21.5 million and 34.5%, respectively, compared with $24.3 million and 37.6% for the third quarter of 2011.

 

International

 

Revenue from International operations for the third quarter totaled $289.1 million, compared to $257.5 million for the third quarter of 2011. The $31.7 million increase was due largely to product and design activities to support clean up operations in Japan and Korea. Gross profit for the third quarter totaled $11.7 million, compared with $5.2 million for the third quarter of 2011.  Gross margin increased to 4.1% for the third quarter compared with 2.0% for the third quarter of 2011, due primarily to the higher margin activities and products associated with our work in Asia.

 

Government Group

 

Government Group revenue for the third quarter of 2012 totaled $44.0 million, compared with $51.7 million in the third quarter of 2011.  The decrease in revenue was due primarily to the completion of our Atlas mill tailings clean-up project in Moab, Utah, partially off-set by increases in engineering and technology projects.

 

Income from operations for the Government Group in the third quarter was $6.0 million, compared to $3.4 million for the third quarter of 2011.The increased income was due primarily to the roll off of lower margin projects associated with government stimulus funding, higher margin new projects and lower SG&A costs.

 

Outlook and Guidance

 

“We are pleased with the progress that we made on a number of fronts to improve our margins and increase our profitability,” said David Lockwood, President and Chief Executive Officer of EnergySolutions. “With the recently announced cost savings and other efforts, we are putting in place the building blocks and business plans that will be the foundation for more profitable growth in 2013 and beyond. We reaffirm the Adjusted EBITDA guidance that we provided last quarter of $130 to $140 million for 2012.”

 

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Forward-Looking Statements

 

Statements in this earnings 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. Such forward-looking statements include statements regarding the Company’s outlook for 2012, strategic initiatives, and expectations for Adjusted EBITDA.  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) the uncertainty regarding the outcome and timing of contract negotiations with the DOE, (b) 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, (c) decreased tax revenue 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, (d) current regulatory initiatives, including the importation of nuclear waste into the U.S. and the disposal and storage of depleted uranium, (e) the weakening of the pound sterling and the related currency translation impact on our business if the currency continues to weaken, (f) adverse public reaction that could lead to increased regulation or limitations on our activities, (g) uncertainty regarding the impact on our business of increased regulatory scrutiny of the nuclear waste industry in the U.S. and U.K., (h) decisions by our customers to reduce, delay or halt their spending on nuclear services, (i) decisions by our commercial customers to store radioactive materials on-site rather than dispose of radioactive materials at one of our facilities, (j) the adverse impact of current or future financial conditions on the value of decommissioning trust funds, and (k) 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, 2011 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.  The Company does not undertake any obligation to release publicly any revision to any of these forward-looking statements.

 

Conference Call Details

 

The EnergySolutions 2012 third quarter teleconference and webcast are scheduled to begin at 10:00 a.m. ET, on Thursday, November 8, 2012.

 

Hosting the call will be David Lockwood, President and Chief Executive Officer, and Greg Wood, Chief Financial Officer.

 

To participate in the event by telephone, please dial (877) 251-1860 five to ten minutes prior to the start time (to allow time for registration) and reference the conference pass-code 50987710. International callers should dial (253) 237-1173 and enter the same pass-code.

 

A replay of the call will be available for one week beginning on Wednesday, August 8. To access the replay, dial (855) 859-2056 and enter pass-code 50987710. International callers should dial (404) 537-3406 and enter the same pass-code.

 

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.

 

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For more information, please contact:

Richard Putnam

EnergySolutions, Inc.

(801) 649-2000

rrputnam@energysolutions.com

 

-Financial Tables to follow-

 

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Table 1

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(dollars in thousands, except per share amounts)

 

 

 

For the Quarter

 

For the Nine Month Period

 

 

 

Ended September 30

 

Ended September 30

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

444,157

 

$

421,027

 

$

1,327,470

 

$

1,346,967

 

Cost of revenue

 

(398,000

)

(383,942

)

(1,213,730

)

(1,227,914

)

 

 

 

 

 

 

 

 

 

 

Gross profit

 

46,157

 

37,085

 

113,740

 

119,053

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

(31,779

)

(32,165

)

(99,661

)

(96,157

)

Equity in income of unconsolidated joint ventures

 

4,286

 

5,714

 

7,422

 

9,995

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

18,664

 

10,634

 

21,501

 

32,891

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(17,636

)

(18,201

)

(52,822

)

(54,850

)

Other income, net

 

12,368

 

2,500

 

46,093

 

35,078

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes and noncontrolling interests

 

13,396

 

(5,067

)

14,772

 

13,119

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

(3,347

)

2,218

 

20

 

(4,514

)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

10,049

 

(2,849

)

14,792

 

8,605

 

 

 

 

 

 

 

 

 

 

 

Less: Net (income) loss attributable to noncontrolling interests

 

3

 

(979

)

35

 

(2,020

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to EnergySolutions

 

$

10,052

 

$

(3,828

)

$

14,827

 

$

6,585

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to EnergySolutions per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.11

 

$

(0.04

)

$

0.17

 

$

0.07

 

Diluted

 

$

0.11

 

$

(0.04

)

$

0.17

 

$

0.07

 

 

 

 

 

 

 

 

 

 

 

Number of shares used in per share calculations:

 

 

 

 

 

 

 

 

 

Basic

 

89,993,618

 

88,845,102

 

89,432,722

 

88,775,360

 

Diluted

 

89,993,618

 

88,845,102

 

89,432,722

 

88,777,647

 

 

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Table 2

 

ENERGYSOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

 

 

 

September 30, 2012

 

December 31, 2011

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

87,913

 

$

77,213

 

Accounts receivable, net of allowance for doubtful accounts

 

280,441

 

302,203

 

Nuclear decommissioning trust fund investments

 

144,481

 

174,270

 

Other current assets

 

244,275

 

281,822

 

Total current assets

 

757,110

 

835,508

 

 

 

 

 

 

 

Property, plant & equipment, net

 

120,633

 

126,609

 

Goodwill

 

308,281

 

306,358

 

Other intangible assets,net

 

244,560

 

260,879

 

Nuclear decommissioning trust fund investments

 

477,993

 

523,326

 

Restricted cash and decontamination and decommissioning deposits

 

331,447

 

332,918

 

Deferred Costs

 

401,671

 

465,577

 

Other noncurrent assets

 

211,184

 

164,758

 

 

 

 

 

 

 

Total assets

 

$

2,852,879

 

$

3,015,933

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current portion of long-term debt

 

$

3,969

 

$

 

Accounts payable

 

109,388

 

140,951

 

Accrued expenses and other current liabilities

 

193,371

 

230,698

 

Facility and equipment decontamination and decommissioning liabilities

 

136,993

 

160,520

 

Unearned revenue, current portion

 

155,229

 

159,112

 

Total current liabilities

 

598,950

 

691,281

 

 

 

 

 

 

 

Long-term debt, less current portion

 

810,624

 

812,734

 

Facility and equipment decontamination and decommissioning liabilities

 

535,940

 

598,530

 

Unearned revenue

 

409,518

 

469,497

 

Other noncurrent liabilities

 

186,076

 

158,634

 

 

 

 

 

 

 

Total liabilities

 

2,541,108

 

2,730,676

 

 

 

 

 

 

 

EnergySolutions stockholders’ equity

 

311,253

 

284,546

 

Noncontrolling interests

 

518

 

711

 

 

 

 

 

 

 

Total stockholders’ equity

 

311,771

 

285,257

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,852,879

 

$

3,015,933

 

 

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Table 3

 

ENERGYSOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(dollars in thousands)

 

 

 

For the Nine Month Period

 

 

 

Ended September 30

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Cash Provided by Operating Activities

 

$

15,766

 

$

12,493

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

Purchases of property, plant and equipment

 

(14,588

)

(15,309

)

Purchase and sale of investments in nuclear decommissioning trust fund

 

2,865

 

3,269

 

Purchases of intangible assets and noncontrolling interests

 

(763

)

(610

)

Proceeds from sale of property, plant and equipment

 

5,317

 

235

 

Cash Used in Investing Activities

 

(7,169

)

(12,415

)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Repayments of long-term debt

 

 

(15,200

)

Other items

 

590

 

(2,221

)

Cash Used in Financing Activities

 

590

 

(17,421

)

 

 

 

 

 

 

Effect of Exchange Rate on Cash

 

1,513

 

(1,471

)

 

 

 

 

 

 

Increase (Decrease) in Cash and Cash Equivalents

 

$

10,700

 

$

(18,814

)

 

 

 

 

 

 

Amortization of Intangible Assets

 

$

19,400

 

$

19,627

 

Depreciation

 

$

14,721

 

$

15,990

 

 

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Table 4

 

ENERGYSOLUTIONS, INC.

GAAP to Non-GAAP Reconciliation

(dollars in thousands, except per share amounts)

 

 

 

For the Quarter

 

For the Nine Month Period

 

 

 

Ended September 30

 

Ended September 30

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income (loss) attributable to EnergySolutions to EBITDA:

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to EnergySolutions

 

$

10,052

 

$

(3,828

)

$

14,827

 

$

6,585

 

Interest expense

 

17,636

 

18,201

 

52,822

 

54,850

 

Income tax expense (benefit)

 

3,347

 

(2,218

)

(20

)

4,514

 

Depreciation expense

 

4,901

 

4,807

 

14,721

 

15,990

 

Amortization of intangible assets

 

6,471

 

6,523

 

19,400

 

19,627

 

EBITDA

 

$

42,407

 

$

23,485

 

$

101,750

 

$

101,566

 

 

 

 

 

 

 

 

 

 

 

Accretion expense

 

7,498

 

7,982

 

22,479

 

23,944

 

Nuclear decommissioning trust fund earnings, net

 

(19,695

)

1,299

 

(52,099

)

(31,474

)

Equity-based compensation

 

1,785

 

3,211

 

5,168

 

8,602

 

Restructuring and other non-recurring charges

 

10,662

 

 

16,808

 

 

Adjusted EBITDA

 

$

42,657

 

$

35,977

 

$

94,106

 

$

102,638

 

 

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 equity-based compensation expense and, non-cash accretion expense, plus or minus nuclear decommissioning trust fund gains or losses net of management fees, restructuring costs and one-time settlements and other non-recurring charges. Beginning in 2011, we have included the changes in ARO cost estimates for the Zion Project as an adjustment to EBITDA to remove certain effects of ARO accounting from this measure. 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 flows, 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.

 

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Table 5

 

ENERGYSOLUTIONS, INC.

REPORTING SEGMENT INFORMATION (UNAUDITED)

(dollars in thousands)

 

 

 

For the Quarter

 

For the Nine Month Period

 

 

 

Ended September 30,

 

Ended September 30

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

Government Group

 

$

43,972

 

$

51,726

 

$

124,744

 

$

185,485

 

Global Commercial Group

 

 

 

 

 

 

 

 

 

Commercial Services

 

48,631

 

47,110

 

129,110

 

141,402

 

LP&D

 

62,407

 

64,736

 

155,768

 

181,434

 

International

 

289,147

 

257,455

 

917,848

 

838,646

 

Total Revenue

 

$

444,157

 

$

421,027

 

$

1,327,470

 

$

1,346,967

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

 

 

 

 

 

Government Group

 

$

8,171

 

$

6,638

 

$

14,516

 

$

16,755

 

Global Commercial Group

 

 

 

 

 

 

 

 

 

Commercial Services

 

4,748

 

913

 

11,474

 

9,698

 

LP&D

 

21,517

 

24,340

 

37,486

 

53,810

 

International Operations

 

11,721

 

5,194

 

50,264

 

38,790

 

Total Gross Profit

 

$

46,157

 

$

37,085

 

$

113,740

 

$

119,053

 

 

 

 

 

 

 

 

 

 

 

Income from Operations

 

 

 

 

 

 

 

 

 

Government Group

 

$

6,016

 

$

3,372

 

$

5,726

 

$

5,730

 

Global Commercial Group

 

26,189

 

18,293

 

66,927

 

64,511

 

 

 

 

 

 

 

 

 

 

 

Group Operating Income

 

32,205

 

21,665

 

72,653

 

70,241

 

Corporate selling, general and administrative expenses

 

(17,827

)

(16,745

)

(58,574

)

(47,345

)

Impairment of goodwill

 

 

 

 

 

Equity in income of unconsolidated joint ventures

 

4,286

 

5,714

 

7,422

 

9,995

 

Total Income from Operations

 

$

18,664

 

$

10,634

 

$

21,501

 

$

32,891

 

 

###

 

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