BETHESDA, Md., March 25, 2020 /PRNewswire/ -- Centrus
Energy Corp. (NYSE American: LEU) today reported results for the
fourth quarter 2019 and full year ended December 31, 2019.
2019 Summary:
Financial Results
- Total revenues of $209.7 million,
separative work units (SWU) and uranium revenue of $169.4 million, and year-end cash balance of
$130.7 million, in line with prior
guidance
- Repaid the $27.5 million
principal balance in outstanding 8.0% notes that matured on
September 30, 2019
- Gross profit of $32.5 million and
net loss of $16.5 million
Commercial Highlights
- Order book at $1.0 billion as of
December 31, 2019
- Signed three-year, $115 million
cost-share contract with U.S. Department of Energy to demonstrate
production of High-Assay, Low-Enriched Uranium (HALEU) for advanced
reactors
- Successfully completed decontamination and decommissioning of
DOE's K-1600 facility at the East Tennessee Technology Park
"With lower cost of sales in our LEU segment and reduced
overhead, we improved our performance significantly in 2019," said
Daniel B. Poneman, Centrus president
and chief executive officer. "We also continue to see significant
growth potential in our technical solutions segment as we
demonstrate our ability to produce HALEU to fuel the next
generation of advanced reactors around the world. I also want to
assure our shareholders and stakeholders that we are taking
vigilant and vigorous steps to address the coronavirus threat, as
the health and safety of our employees and their families is of
paramount concern."
Financial Results
For the full year, the Company reported a net loss of
$16.5 million in 2019 compared to a
net loss of $104.1 million in 2018.
The net loss allocable to common stockholders was $24.3 million, or $2.54 per share, in 2019, compared to a net loss
allocable to common stockholders of $111.9
million, or $12.23 per share,
in 2018. Revenue for 2019 was $209.7
million, an increase of $16.7
million or 9 percent from the prior year.
Revenue from the LEU segment increased $5.0 million, or 3 percent, in 2019 compared to
2018 due to higher average unit sales prices for SWU and uranium
and changes in sales volumes.
Cost of sales for the LEU segment declined $69.1 million, or 37 percent, in 2019 compared to
2018, primarily reflecting a decline in the average cost of sales
per SWU and the changes in SWU and uranium sales volumes.
Revenue from the technical solutions segment increased
$11.7 million, or 41 percent, in 2019
compared to 2018, primarily driven by work commencing on the HALEU
contract. Cost of sales for the technical solutions segment
increased by $35.4 million, or 153
percent, compared to 2018, reflecting an increase in work performed
by our technical solutions segment during the period. In addition,
cost of sales in the fourth quarter of 2019 includes an accrued
contract loss of $18.3 million
related to our share of remaining projected program costs under the
HALEU cost share contract through 2022.
Centrus realized a gross profit of $32.5
million in 2019, an increase of $50.4
million compared to the gross loss of $17.9 million in 2018.
Advanced technology costs declined $11.5
million, or 44 percent, to $14.6
million in 2019, primarily due to a reduction in our license
and facility caretaker costs at Piketon following the commencement
of work under the HALEU contract in June
2019.
Selling, General and Administrative
SG&A expenses declined $6.2
million, or 16 percent, to $33.7
million in 2019 compared to 2018. Compensation and benefits
declined $4.0 million, information
technology costs declined $0.8
million, consulting expenses declined $0.4 million, travel costs declined $0.4 million in 2019, and other costs declined by
a net $0.6 million.
Nonoperating Components of Net Periodic Benefit Expense
(Income)
Nonoperating components of net periodic benefit expense (income)
related to the Company's retiree benefit plans include the net of
actuarial gains and losses recognized each year in the fourth
quarter. Centrus recognized $4.0
million of net actuarial gains in 2019 compared to net
actuarial losses of $17.3 million in
2018. The net gain in 2019 reflects favorable investment returns
relative to the expected return assumption, mortality assumptions,
and healthcare claim assumptions, partially offset by decreases in
market interest rates.
2020 Outlook
On March 11, 2020, the World
Health Organization declared the novel strain of coronavirus
(COVID-19) a global pandemic and recommended containment and
mitigation measures worldwide. We cannot reasonably estimate the
length or severity of this pandemic, or the extent to which the
disruption may materially impact our consolidated financial
position, consolidated results of operations, and consolidated cash
flows in fiscal 2020. Consequently, we are not providing guidance
on the Company's financial results for 2020 at this time.
Conference Call
Centrus Energy's investor conference call to discuss the fourth
quarter and full year 2019 results is scheduled for March 26, 2020, at 8:30
a.m. EDT. A live webcast of the conference call can be
accessed through the Investor Relations section of the Company's
website at www.centrusenergy.com, and a recording of the call will
be available on the site through April 3,
2020.
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 Annual Report on Form 10-K, including Management's
Discussion and Analysis of Financial Condition and Results of
Operations in Part II, Item 7, contains "forward-looking
statements" within the meaning of Section 21E of the Securities
Exchange Act of 1934. In this context, forward-looking statements
mean statements related to future events, 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 8.25% notes (the "8.25% Notes") maturing in February 2027 and our Series B Senior Preferred
Stock; 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 and our Series B Senior Preferred 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; risks related to natural and other
disasters, including 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 TENEX, Joint-Stock Company ("TENEX"), under
a commercial supply agreement with TENEX and deliveries under a
long-term supply agreement with Orano Cycle ("Orano"); 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 United States 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, including risks relating to the potential expiration
of the 1992 Russian Suspension Agreement ("RSA") and/or a renewal
of the RSA on terms not favorable to us; 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; 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 deployment of the American
Centrifuge technology and our ability to perform and absorb costs
under our agreement with DOE to demonstrate the capability to
produce high assay low enriched uranium ("HALEU") and our ability
to obtain and/or perform under other agreements; risks relating to
whether or when government or commercial demand for HALEU will
materialize; the potential for further demobilization or
termination of our American Centrifuge work; 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 and cost-share
contracts, including the risk that costs could be higher than
expected; risks that we will be unable to obtain new business
opportunities or achieve market acceptance of our products and
services or that products or services provided by others will
render our products 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; risks related to pandemics and
other health crises, such as the global novel coronavirus
(COVID-19) outbreak; 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; 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 this and our other filings
with the Securities and Exchange Commission.
For a discussion of these risks and uncertainties and other
factors that may affect our future results, please see Part I, Item
1A, Risk Factors, and the other sections of this Annual
Report on Form 10-K. These factors may not constitute all factors
that could cause actual results to differ from those discussed in
any forward-looking statement. Accordingly, forward-looking
statements should not be relied upon as a predictor of actual
results. Readers are urged to carefully review and consider the
various disclosures made in this report and in our other filings
with the Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that may affect our
business. We do not undertake to update our forward-looking
statements to reflect events or circumstances that may arise after
the date of this Annual Report on Form 10-K, except as required by
law.
Contacts:
Investors: Dan Leistikow (301)
564-3399
Media: Lindsey Geisler (301)
564-3392
CENTRUS ENERGY
CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(in millions,
except share and per share data)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
|
|
|
|
Separative work
units
|
$
|
36.3
|
|
|
$
|
62.4
|
|
|
$
|
123.7
|
|
|
$
|
130.6
|
|
Uranium
|
7.6
|
|
|
18.9
|
|
|
45.7
|
|
|
33.8
|
|
Technical
solutions
|
11.8
|
|
|
2.5
|
|
|
40.3
|
|
|
28.6
|
|
Total
revenue
|
55.7
|
|
|
83.8
|
|
|
209.7
|
|
|
193.0
|
|
Cost of
Sales:
|
|
|
|
|
|
|
|
Separative work units
and uranium
|
18.2
|
|
|
89.1
|
|
|
118.6
|
|
|
187.7
|
|
Technical
solutions
|
30.7
|
|
|
4.4
|
|
|
58.6
|
|
|
23.2
|
|
Total cost of
sales
|
48.9
|
|
|
93.5
|
|
|
177.2
|
|
|
210.9
|
|
Gross profit
(loss)
|
6.8
|
|
|
(9.7)
|
|
|
32.5
|
|
|
(17.9)
|
|
Advanced technology
costs
|
1.6
|
|
|
6.9
|
|
|
14.6
|
|
|
26.1
|
|
Selling, general and
administrative
|
9.2
|
|
|
10.2
|
|
|
33.7
|
|
|
39.9
|
|
Amortization of
intangible assets
|
2.4
|
|
|
2.1
|
|
|
6.5
|
|
|
6.6
|
|
Special charges
(credits) for workforce reductions and advisory
costs
|
0.3
|
|
|
0.7
|
|
|
(1.9)
|
|
|
2.2
|
|
Gain on sales of
assets
|
—
|
|
|
—
|
|
|
(0.7)
|
|
|
(0.3)
|
|
Operating
loss
|
(6.7)
|
|
|
(29.6)
|
|
|
(19.7)
|
|
|
(92.4)
|
|
Gain on early
extinguishment of
debt
|
—
|
|
|
(0.5)
|
|
|
—
|
|
|
(0.5)
|
|
Nonoperating
components of net periodic benefit expense
(income)
|
(4.1)
|
|
|
15.5
|
|
|
(4.3)
|
|
|
10.6
|
|
Interest
expense
|
0.1
|
|
|
1.1
|
|
|
3.0
|
|
|
4.1
|
|
Investment
income
|
(0.3)
|
|
|
(0.6)
|
|
|
(2.2)
|
|
|
(2.5)
|
|
Loss before income
taxes
|
(2.4)
|
|
|
(45.1)
|
|
|
(16.2)
|
|
|
(104.1)
|
|
Income tax
expense
|
0.4
|
|
|
0.1
|
|
|
0.3
|
|
|
—
|
|
Net loss and
comprehensive loss
|
(2.8)
|
|
|
(45.2)
|
|
|
(16.5)
|
|
|
(104.1)
|
|
Preferred stock
dividends - undeclared and
cumulative
|
1.9
|
|
|
2.0
|
|
|
7.8
|
|
|
7.8
|
|
Net loss allocable to
common stockholders
|
$
|
(4.7)
|
|
|
$
|
(47.2)
|
|
|
$
|
(24.3)
|
|
|
$
|
(111.9)
|
|
|
|
|
|
|
|
|
|
Net loss per common
share - basic and
diluted
|
$
|
(0.49)
|
|
|
$
|
(5.10)
|
|
|
$
|
(2.54)
|
|
|
$
|
(12.23)
|
|
Average number of
common shares outstanding - basic and diluted (in
thousands)
|
9,583
|
|
|
9,246
|
|
|
9,566
|
|
|
9,151
|
|
CENTRUS ENERGY
CORP.
CONSOLIDATED
BALANCE SHEETS
(in millions,
except share and per share data)
|
|
|
December
31,
|
|
2019
|
|
2018
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
130.7
|
|
|
$
|
123.1
|
|
Accounts
receivable
|
21.1
|
|
|
60.2
|
|
Inventories
|
64.5
|
|
|
129.7
|
|
Deferred costs
associated with deferred revenue
|
144.1
|
|
|
134.9
|
|
Deposits for
financial assurance
|
0.2
|
|
|
30.3
|
|
Other current
assets
|
9.0
|
|
|
6.3
|
|
Total current
assets
|
369.6
|
|
|
484.5
|
|
Property, plant and
equipment, net
|
3.7
|
|
|
4.2
|
|
Deposits for
financial assurance
|
5.7
|
|
|
6.3
|
|
Intangible assets,
net
|
69.5
|
|
|
76.0
|
|
Other long-term
assets
|
7.4
|
|
|
0.7
|
|
Total
assets
|
$
|
455.9
|
|
|
$
|
571.7
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
50.7
|
|
|
$
|
52.4
|
|
Payables under SWU
purchase agreements
|
8.1
|
|
|
46.0
|
|
Inventories owed to
customers and suppliers
|
5.6
|
|
|
103.0
|
|
Deferred revenue and
advances from customers
|
266.3
|
|
|
204.5
|
|
Current
debt
|
6.1
|
|
|
32.8
|
|
Total current
liabilities
|
336.8
|
|
|
438.7
|
|
Long-term
debt
|
114.1
|
|
|
120.2
|
|
Postretirement health
and life benefit obligations
|
138.6
|
|
|
136.2
|
|
Pension benefit
liabilities
|
141.8
|
|
|
168.9
|
|
Advances from
customers
|
29.4
|
|
|
15.0
|
|
Other long-term
liabilities
|
32.1
|
|
|
14.6
|
|
Total
liabilities
|
792.8
|
|
|
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 $127.2 as of December
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, 8,347,427
and
8,031,307 shares issued and outstanding as of December
31, 2019 and December 31, 2018, respectively
|
0.8
|
|
|
0.8
|
|
Class B Common Stock,
par value $0.10 per share, 30,000,000 shares authorized, 1,117,462
and
1,406,082 shares issued and outstanding as of December
31, 2019 and December 31, 2018, respectively
|
0.1
|
|
|
0.1
|
|
Excess of capital
over par value
|
61.5
|
|
|
61.2
|
|
Accumulated
deficit
|
(405.0)
|
|
|
(388.5)
|
|
Accumulated other
comprehensive income, net of tax
|
1.1
|
|
|
(0.1)
|
|
Total stockholders'
deficit
|
(336.9)
|
|
|
(321.9)
|
|
Total liabilities and
stockholders' deficit
|
$
|
455.9
|
|
|
$
|
571.7
|
|
CENTRUS ENERGY
CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(in
millions)
|
Year
Ended December 31,
|
|
2019
|
|
2018
|
OPERATING
|
|
|
|
Net loss
|
$
|
(16.5)
|
|
|
$
|
(104.1)
|
|
Adjustments to
reconcile net loss to cash used in operating activities:
|
|
|
|
Depreciation and
amortization
|
7.0
|
|
|
7.4
|
|
Accrued loss on
long-term contract
|
18.3
|
|
|
—
|
|
Immediate recognition
of retirement benefit plans (gains) losses, net
|
(4.0)
|
|
|
17.3
|
|
PIK interest on
paid-in-kind toggle notes
|
1.1
|
|
|
1.7
|
|
Gain on early
extinguishment of debt
|
—
|
|
|
(0.5)
|
|
Gain on sales of
assets
|
(0.7)
|
|
|
(0.4)
|
|
Inventory valuation
adjustments
|
2.3
|
|
|
—
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
29.3
|
|
|
9.7
|
|
Inventories,
net
|
0.1
|
|
|
61.0
|
|
Payables under SWU
purchase agreements
|
(37.9)
|
|
|
(33.4)
|
|
Deferred revenue and
advances from customers, net of deferred costs
|
44.0
|
|
|
0.1
|
|
Accounts payable and
other liabilities
|
(12.3)
|
|
|
3.7
|
|
Pension and
postretirement liabilities
|
(19.5)
|
|
|
(28.0)
|
|
Other, net
|
0.1
|
|
|
(8.9)
|
|
Cash provided by (used
in) operating activities
|
11.3
|
|
|
(74.4)
|
|
|
|
|
|
INVESTING
|
|
|
|
Capital
expenditures
|
(0.1)
|
|
|
(0.1)
|
|
Proceeds from sales
of assets
|
0.7
|
|
|
0.5
|
|
Cash provided by
investing activities
|
0.6
|
|
|
0.4
|
|
|
|
|
|
FINANCING
|
|
|
|
Principal payments on
debt
|
(27.5)
|
|
|
(5.0)
|
|
Payments for deferred
financing costs
|
(1.4)
|
|
|
—
|
|
Payment of interest
classified as debt
|
(6.1)
|
|
|
(6.1)
|
|
Cash used in financing
activities
|
(35.0)
|
|
|
(11.1)
|
|
|
|
|
|
Decrease in cash,
cash equivalents and restricted cash
|
(23.1)
|
|
|
(85.1)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
159.7
|
|
|
244.8
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
136.6
|
|
|
$
|
159.7
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Interest paid in
cash
|
$
|
1.5
|
|
|
$
|
7.1
|
|
Non-cash
activities:
|
|
|
|
Conversion of
interest payable-in-kind to debt
|
$
|
0.7
|
|
|
$
|
1.7
|
|
Deferred financing
costs included in accounts payable and accrued
liabilities
|
$
|
0.8
|
|
|
$
|
—
|
|
Additional right of
use operating lease assets recorded
|
$
|
5.2
|
|
|
$
|
—
|
|
Disposal of right of
use operating lease assets for early termination
|
$
|
0.4
|
|
|
$
|
—
|
|
Exchange of debt for
Class A common stock
|
$
|
—
|
|
|
$
|
0.9
|
|
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SOURCE Centrus Energy Corp.