BETHESDA, Md., May 8, 2019 /PRNewswire/ -- Centrus Energy
Corp. (NYSE American: LEU) today reported a net loss of
$20.9 million for the quarter ended
March 31, 2019, compared to a net
loss of $25.0 million for the first
quarter of 2018. The net loss allocable to common stockholders was
$22.9 million, or $2.40 per common share (basic and diluted),
compared to a net loss of allocable to common stockholders of
$27.0 million or $2.97 per common share (basic and diluted), for
the first quarter of 2018.
"Our first quarter results show progress on our path to align
our cost-structure with our current business and grow our order
book, keeping us on track to return to profitability in 2020," said
Daniel Poneman, Centrus president
and chief executive officer. "We expect to continue to see improved
results during the year as we fulfill future sales with lower-cost
supplies and our reduced operating expenses."
Refer to 2019 Outlook below for further details and
factors that could affect the Company's 2019-2020
results.
Financial Results
Centrus generated total revenue of $38.7
million for the first quarter of 2019, an increase of
$3.0 million, or 8%, from the prior
year period.
Revenue from the LEU segment increased $13.8 million, or 65%, in the first quarter,
compared to the corresponding period in 2018, reflecting the
variability in timing of utility customer orders. The volume of
uranium sales increased 463% while the volume of SWU sales declined
8%. The average price billed to customers for uranium sales
increased 14% reflecting recent increases in uranium market prices.
The average price billed to customers for sales of SWU declined 24%
reflecting the trend of lower SWU market prices in recent years and
the particular contracts under which SWU were sold during the
periods. The average cost of sales per SWU declined approximately
35% primarily due to lower pricing in new supply contracts. Cost of
sales for the LEU segment increased $3.5
million, or 10%, in the three months ended March 31, 2019, compared to the corresponding
period in 2018, primarily reflecting changes in SWU and uranium
sales volumes.
Revenue from the Contract Services segment declined $10.8 million in the three months ended
March 31, 2019, compared to the first
quarter of 2018, which included $9.5
million of revenue related to the January 2018 settlement with DOE related to past
work performed. Cost of sales for the Contract Services segment
declined $0.6 million, or 9%, in the
three months ended March 31, 2019,
compared to the corresponding period in 2018, reflecting reduced
spending on American Centrifuge as the Company and UT-Battelle work
toward a successor agreement, partially offset by costs for
services provided under contracts with the U.S. government and
X-energy that commenced later in 2018.
Centrus realized a gross loss of $5.5
million in the three months ended March 31, 2019, an improvement of $0.1 million compared to the gross loss of
$5.6 million in the corresponding
period in 2018.
2019 Outlook
Centrus anticipates 2019 SWU and uranium revenue to be in the
range of $85 million to $120 million and total revenue to be in a range
of $125 million to $160 million. Consistent with prior years,
revenue continues to be most heavily weighted to the second half of
the year. The Company expects to end 2019 with a cash and cash
equivalents balance in a range of $120
million to $140 million.
The Company's financial guidance is subject to a number of
assumptions and uncertainties that could affect results either
positively or negatively. Variations from these expectations could
cause differences between the guidance and the ultimate results.
Among the factors that could affect Centrus' results are:
- Additional purchases or sales of SWU and uranium;
- Conditions in the LEU and energy markets, including pricing,
demand, operations, and regulations
- Timing of customer orders, related deliveries, and purchases of
LEU or components;
- Timing of execution of agreements for HALEU and with
UT-Battelle, and terms established in the definitized
contracts;
- Financial market conditions and other factors that may affect
pension and benefit liabilities and the value of related
assets
- The outcome of legal proceedings and other contingencies;
- Potential use of cash for strategic initiatives;
- Actions taken by customers, including actions that might affect
existing contracts, as a result of market and other conditions
impacting Centrus' customers and the industry; and
- Timing of return of cash collateral supporting financial
assurance for the Piketon
facility.
About Centrus Energy Corp.
Centrus is a trusted supplier of nuclear fuel and services for
the nuclear power industry. Centrus provides value to its utility
customers through the reliability and diversity of its supply
sources – helping them meet the growing need for clean, affordable,
carbon-free electricity. Since 1998, the Company has provided its
utility customers with more than 1,750 reactor years of fuel, which
is equivalent to 7 billion tons of coal.
With world-class technical capabilities, Centrus offers turnkey
engineering and advanced manufacturing solutions to its customers.
The Company is also advancing the next generation of centrifuge
technologies so that America can restore its domestic uranium
enrichment capability in the future. Find out more at
www.centrusenergy.com.
Forward-Looking Statements
This news release contains "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934 -
that is, statements related to future events. In this context,
forward-looking statements may address our expected future business
and financial performance, and often contain words such as
"expects", "anticipates", "intends", "plans", "believes", "will",
"should", "could", "would" or "may" and other words of similar
meaning. Forward-looking statements by their nature address matters
that are, to different degrees, uncertain. For Centrus Energy
Corp., particular risks and uncertainties that could cause our
actual future results to differ materially from those expressed in
our forward-looking statements include: risks related to our
significant long-term liabilities, including material unfunded
defined benefit pension plan obligations and postretirement health
and life benefit obligations; risks relating to our outstanding
8.0% paid-in-kind ("PIK") toggle notes (the "8% PIK Toggle Notes")
maturing in September 2019, our 8.25%
notes (the "8.25% Notes") maturing in February 2027 and our Series B Senior Preferred
Stock, including the potential termination of the guarantee by our
principal subsidiary United States Enrichment Corporation
("Enrichment Corp.") of the 8% PIK Toggle Notes; risks related to
the use of our net operating loss ("NOLs") carryforwards and net
unrealized built-in losses ("NUBILs") to offset future taxable
income and the use of the Rights Agreement (as defined herein) to
prevent an "ownership change" as defined in Section 382 of the
Internal Revenue Code of 1986, as amended (the "Code") and our
ability to generate taxable income to utilize all or a portion of
the NOLs and NUBILs prior to the expiration thereof; risks related
to the limited trading markets in our securities; risks related to
our ability to maintain the listing of our Class A Common Stock on
the NYSE American LLC (the "NYSE American"); risks related to
decisions made by our Class B stockholders regarding their
investment in the Company based upon factors that are unrelated to
the Company's performance; risks related to the Company's capital
concentration; the continued impact of the March 2011 earthquake and tsunami in Japan on the nuclear industry and on our
business, results of operations and prospects; the impact and
potential extended duration of the current supply/demand imbalance
in the market for low-enriched uranium ("LEU"); our dependence on
others for deliveries of LEU including deliveries from the Russian
government-owned entity Joint Stock Company "TENEX" ("TENEX") under
a commercial supply agreement with TENEX and deliveries under a
long-term supply agreement with Orano Cycle ("Orano"); risks
related to our ability to sell the LEU we procure pursuant to our
purchase obligations under our supply agreements; risks relating to
our sales order book, including uncertainty concerning customer
actions under current contracts and in future contracting due to
market conditions and lack of current production capability; risks
related to financial difficulties experienced by customers,
including possible bankruptcies, insolvencies or any other
inability to pay for our products or services; pricing trends and
demand in the uranium and enrichment markets and their impact on
our profitability; movement and timing of customer orders; risks
related to the value of our intangible assets related to the sales
order book and customer relationships; risks associated with our
reliance on third-party suppliers to provide essential products and
services to us; risks related to existing or new trade barriers and
contract terms that limit our ability to deliver LEU to customers;
risks related to actions, including government reviews, that may be
taken by the U.S. government, the Russian government or other
governments that could affect our ability to perform under our
contract obligations or the ability of our sources of supply to
perform under their contract obligations to us, including the
imposition of sanctions, restrictions or other requirements; the
impact of government regulation including by the U.S. Department of
Energy ("DOE") and the U.S. Nuclear Regulatory Commission;
uncertainty regarding our ability to commercially deploy
competitive enrichment technology; risks and uncertainties
regarding funding for the American Centrifuge project and our
ability to obtain and/or perform under our future agreements with
the DOE, UT-Battelle, LLC ("UT-Battelle"), the management and
operating contractor for Oak Ridge National Laboratory ("ORNL"),
for continued research and development of the American Centrifuge
technology; uncertainties regarding uses for the Piketon, Ohio facility that we lease from the
DOE; the potential for further demobilization or termination of the
American Centrifuge project; risks related to the current
demobilization of portions of the American Centrifuge project,
including risks that the schedule could be delayed and costs could
be higher than expected; risks related to our ability to perform
and receive timely payment under agreements with the DOE, including
risk and uncertainties related to the ongoing funding of the
government and potential audits; the competitive bidding process
associated with obtaining a federal contract; risks related to our
ability to perform fixed-price contracts, including the risk that
costs could be higher than expected; risks that we will be unable
to obtain new business opportunities, achieve market acceptance of
our products and services or that products or services provided by
others will render our goods or services obsolete or
noncompetitive; risks that we will not be able to timely complete
the work that we are obligated to perform; failures or security
breaches of our information technology systems; potential strategic
transactions, which could be difficult to implement, disrupt our
business or change our business profile significantly; the outcome
of legal proceedings and other contingencies (including lawsuits
and government investigations or audits); the competitive
environment for our products and services; changes in the nuclear
energy industry; the impact of financial market conditions on our
business, liquidity, prospects, pension assets and insurance
facilities; risks related to the identification of a material
weakness in our internal controls over financial reporting; the
risks of revenue and operating results fluctuating significantly
from quarter to quarter, and in some cases, year to year; and other
risks and uncertainties discussed in our filings with the
Securities and Exchange Commission, including under Part 1. Item1A
- "Risk Factors" in our Annual Report on Form 10-K for the year
ended December 31, 2018.
Contact
Investors: Dan Leistikow (301)
564-3399
Media: Jeremy Derryberry (301)
564-3392
CENTRUS ENERGY
CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited; in millions, except
share and per share data)
|
|
|
Three Months
Ended
March 31,
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
Separative work
units
|
$
|
12.4
|
|
|
$
|
17.7
|
|
Uranium
|
22.7
|
|
|
3.6
|
|
Contract
services
|
3.6
|
|
|
14.4
|
|
Total
revenue
|
38.7
|
|
|
35.7
|
|
Cost of
Sales:
|
|
|
|
Separative work units
and uranium
|
38.3
|
|
|
34.8
|
|
Contract
services
|
5.9
|
|
|
6.5
|
|
Total cost of
sales
|
44.2
|
|
|
41.3
|
|
Gross loss
|
(5.5)
|
|
|
(5.6)
|
|
Advanced technology
license and decommissioning costs
|
6.6
|
|
|
7.7
|
|
Selling, general and
administrative
|
8.1
|
|
|
11.2
|
|
Amortization of
intangible assets
|
1.1
|
|
|
1.3
|
|
Special charges
(credits) for workforce reductions and advisory costs
|
(0.1)
|
|
|
0.6
|
|
Gain on sales of
assets
|
(0.4)
|
|
|
(0.1)
|
|
Operating
loss
|
(20.8)
|
|
|
(26.3)
|
|
Nonoperating
components of net periodic benefit expense (income)
|
(0.1)
|
|
|
(1.6)
|
|
Interest
expense
|
1.0
|
|
|
1.0
|
|
Investment
income
|
(0.7)
|
|
|
(0.6)
|
|
Loss before income
taxes
|
(21.0)
|
|
|
(25.1)
|
|
Income tax
benefit
|
(0.1)
|
|
|
(0.1)
|
|
Net loss and
comprehensive loss
|
(20.9)
|
|
|
(25.0)
|
|
Preferred stock
dividends - undeclared and cumulative
|
2.0
|
|
|
2.0
|
|
Net loss allocable to
common stockholders
|
$
|
(22.9)
|
|
|
$
|
(27.0)
|
|
|
|
|
|
Net loss per common
share - basic and diluted
|
$
|
(2.40)
|
|
|
$
|
(2.97)
|
|
Average number of
common shares outstanding - basic and diluted (in
thousands)
|
9,532
|
|
|
9,103
|
|
CENTRUS ENERGY
CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited; in
millions, except share and per share data)
|
|
|
March 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
87.9
|
|
|
$
|
123.1
|
|
Accounts
receivable
|
39.5
|
|
|
60.2
|
|
Inventories
|
75.1
|
|
|
129.7
|
|
Deferred costs
associated with deferred revenue
|
134.9
|
|
|
134.9
|
|
Deposits for
financial assurance
|
30.5
|
|
|
30.3
|
|
Other current
assets
|
6.6
|
|
|
6.3
|
|
Total current
assets
|
374.5
|
|
|
484.5
|
|
Property, plant and
equipment, net
|
4.1
|
|
|
4.2
|
|
Deposits for
financial assurance
|
6.3
|
|
|
6.3
|
|
Intangible assets,
net
|
74.9
|
|
|
76.0
|
|
Other long-term
assets
|
4.9
|
|
|
0.7
|
|
Total
assets
|
$
|
464.7
|
|
|
$
|
571.7
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
54.9
|
|
|
$
|
52.4
|
|
Payables under SWU
purchase agreements
|
—
|
|
|
46.0
|
|
Inventories owed to
customers and suppliers
|
64.2
|
|
|
103.0
|
|
Deferred
revenue
|
204.5
|
|
|
204.5
|
|
Current
debt
|
33.6
|
|
|
32.8
|
|
Total current
liabilities
|
357.2
|
|
|
438.7
|
|
Long-term
debt
|
117.1
|
|
|
120.2
|
|
Postretirement health
and life benefit obligations
|
134.5
|
|
|
136.2
|
|
Pension benefit
liabilities
|
166.4
|
|
|
168.9
|
|
Advances from
customers
|
15.0
|
|
|
15.0
|
|
Other long-term
liabilities
|
17.2
|
|
|
14.6
|
|
Total
liabilities
|
807.4
|
|
|
893.6
|
|
Stockholders'
deficit:
|
|
|
|
Preferred stock, par
value $1.00 per share, 20,000,000 shares authorized
|
|
|
|
Series A Participating
Cumulative Preferred Stock, none issued
|
—
|
|
|
—
|
|
Series B Senior
Preferred Stock, 7.5% cumulative, 104,574 shares issued and
outstanding and
an aggregate liquidation preference
of $121.3 as of March 31, 2019 and $119.3 as of
December 31, 2018
|
4.6
|
|
|
4.6
|
|
Class A Common Stock,
par value $0.10 per share, 70,000,000 shares authorized,
8,031,307
shares issued and outstanding as of
March 31, 2019 and December 31, 2018
|
0.8
|
|
|
0.8
|
|
Class B Common Stock,
par value $0.10 per share, 30,000,000 shares authorized,
1,406,082
shares issued and outstanding as of
March 31, 2019 and December 31, 2018
|
0.1
|
|
|
0.1
|
|
Excess of capital
over par value
|
61.3
|
|
|
61.2
|
|
Accumulated
deficit
|
(409.4)
|
|
|
(388.5)
|
|
Accumulated other
comprehensive income, net of tax
|
(0.1)
|
|
|
(0.1)
|
|
Total stockholders'
deficit
|
(342.7)
|
|
|
(321.9)
|
|
Total liabilities and
stockholders' deficit
|
$
|
464.7
|
|
|
$
|
571.7
|
|
CENTRUS ENERGY
CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited; in
millions)
|
|
|
Three Months
Ended
March 31,
|
|
2019
|
|
2018
|
OPERATING
|
|
|
|
Net loss
|
$
|
(20.9)
|
|
|
$
|
(25.0)
|
|
Adjustments to
reconcile net loss to cash used in operating activities:
|
|
|
|
Depreciation and
amortization
|
1.3
|
|
|
1.6
|
|
PIK interest on
paid-in-kind toggle notes
|
0.4
|
|
|
0.4
|
|
Gain on sales of
assets
|
(0.4)
|
|
|
(0.1)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
11.2
|
|
|
45.2
|
|
Inventories,
net
|
25.6
|
|
|
5.0
|
|
Payables under SWU
purchase agreements
|
(46.0)
|
|
|
(55.9)
|
|
Deferred revenue, net
of deferred costs
|
—
|
|
|
(18.9)
|
|
Accounts payable and
other liabilities
|
1.2
|
|
|
(2.0)
|
|
Pension and
postretirement liabilities
|
(4.2)
|
|
|
(3.4)
|
|
Other, net
|
(0.1)
|
|
|
0.8
|
|
Cash used in operating
activities
|
(31.9)
|
|
|
(52.3)
|
|
|
|
|
|
INVESTING
|
|
|
|
Capital
expenditures
|
—
|
|
|
(0.1)
|
|
Proceeds from sales
of assets
|
—
|
|
|
0.1
|
|
Cash provided by
investing activities
|
—
|
|
|
—
|
|
|
|
|
|
FINANCING
|
|
|
|
Payment of interest
classified as debt
|
(3.1)
|
|
|
(3.0)
|
|
Cash used in financing
activities
|
(3.1)
|
|
|
(3.0)
|
|
|
|
|
|
Decrease in cash,
cash equivalents and restricted cash
|
(35.0)
|
|
|
(55.3)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
159.7
|
|
|
244.8
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
124.7
|
|
|
$
|
189.5
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Interest paid in
cash
|
$
|
0.4
|
|
|
$
|
0.4
|
|
Non-cash
activities:
|
|
|
|
Conversion of
interest payable-in-kind to debt
|
$
|
0.7
|
|
|
$
|
0.9
|
|
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SOURCE Centrus Energy Corp.