BETHESDA, Md., Nov. 12, 2020 /PRNewswire/ -- Centrus Energy
Corp. (NYSE American: LEU) today reported a net loss of
$7.0 million for the quarter ended
September 30, 2020, compared to a net
income of $22.8 million for the third
quarter of 2019. The net loss allocable to common stockholders was
$8.9 million, or $0.83 (basic and diluted) per common share,
compared to a net income allocable to common stockholders of
$20.9 million or $2.18 (basic) and $2.17 (diluted) per common share, for the third
quarter of 2019.
"This has been an exciting quarter for the company, with the
launch of the Department of Energy's Advanced Reactor Demonstration
Program – which could jump-start commercial demand for HALEU – and
our successful capital raise," said Daniel
B. Poneman, Centrus president and chief executive
officer. "Construction of our HALEU demonstration plant is on
schedule and on budget, and we are poised to be first to market
with this promising new fuel when the demonstration is completed in
2022. We are continuing our efforts to improve our capital
structure, having raised approximately $25
million and launched our tender offer to retire up to
$60 million of the preferred."
Financial Results
Centrus generated total revenue of $33.6
million for the third quarter of 2020, a decrease of
$71.1 million from the prior year
period.
As noted in previous filings, Centrus' LEU segment is primarily
built upon multi-year contracts contained in our sales order book
to deliver SWU in which our utility customers have annual, not
quarterly, purchase commitments, and Centrus recognizes the revenue
from those sales in whatever quarter the customer elects to take
delivery of their annual purchase commitment. Revenue in this
segment varies considerably from quarter to quarter based on the
timing of customer deliveries. That said, there were no SWU
deliveries in the three months ended September 30, 2020, with revenue of $0.1 million for ancillary services. As a result,
revenue from the LEU segment declined $69.1
million (or 79%) in the three months and $12.7 million (or 10%) in the nine months ended
September 30, 2020, compared to the
corresponding periods in 2019. SWU sales volume in the nine
months ended September 30, 2020,
declined 54% compared to the corresponding period in 2019
reflecting the variability in timing of utility customer orders.
SWU revenue in the nine months ended September 30, 2020, includes $32.4 million collected in the second quarter
from a customer in settlement of a supply contract rejected in
bankruptcy court. Excluding these proceeds, the average price per
SWU increased 42% in the nine-month period compared to 2019,
reflecting the particular contracts under which SWU were sold
during the periods.
Revenue from uranium sales increased $5.8
million in the three months and declined $14.7 million in nine months ended September 30, 2020, compared to the corresponding
periods in 2019. For the nine-month period, the volume of
uranium sold declined 45% and the average price increased 12%.
We anticipate that revenue in the fourth quarter of this year
for LEU segment will be the highest of any quarter for 2020,
assuming there are no interruptions to our planned customer
deliveries based on changes in the market or Covid-19. Cost of
sales for the LEU segment declined $34.8
million in the three months and $48.6
million in the nine months ended September 30, 2020, compared to the corresponding
periods in 2019. There were no SWU deliveries in the three
months ended September 30,
2020. For the nine-month period, the decline in cost of sales
reflects the 54% decline in SWU sales volume and the 45% decline in
uranium sales volume, partially offset by a 10% increase in the
average unit cost of sales for uranium. Cost of sales includes
legacy costs related to former employees of the Portsmouth and
Paducah Gaseous Diffusion Plants of $2.4
million in the nine months ended September 30, 2020, compared to $2.8 million in the nine months ended
September 30, 2019. The average cost
of sales per SWU excluding legacy costs declined approximately 3%
in the nine months ended September 30,
2020, compared to the corresponding period in 2019. Our
inventories are valued at the lower of cost or net realizable
value. Valuation adjustments for our uranium inventory to reflect
declines in uranium market price indicators totaled $2.3 million in the nine months ended
September 30, 2019.
Revenue from the technical solutions segment declined
$2.0 million in the three months and
increased $13.0 million in the nine
months ended September 30, 2020,
compared to the corresponding periods in 2019. The increases were
primarily the result of work performed under the HALEU contract.
Revenue in the current periods included work performed under the
UT-Battelle contract and revenue in the prior periods included work
performed under an agreement with DOE to decontaminate and
decommission its K-1600 facility in Tennessee. The K-1600 contract was completed
in October 2019.
Cost of sales for the technical solutions segment was flat in
the three months and increased $12.0
million in the nine months ended September 30, 2020, compared to the corresponding
periods in 2019, reflecting in part the mix of technical solutions
work performed in each of the periods including work performed
under the HALEU contract in the current period. Cost of sales
benefited by $3.4 million in the
three months and $8.7 million in the
nine months ended September 30, 2020,
for previously accrued contract losses attributable to work
performed under the HALEU contract in 2020.
Centrus realized a gross loss of $0.8
million in the three months ended September 30, 2020, compared to a gross profit of
$35.5 million in the corresponding
period in 2019. In the nine months ended September 30, 2020, we realized a gross profit of
$62.6 million compared to a gross
profit of $25.7 million in the
corresponding period in 2019. We ended the third quarter of 2020
with a consolidated cash balance of $152.8
million.
Selling, general and administrative (SG&A) expenses
decreased $2.0 million in the three
months compared to the corresponding period in 2019, primarily a
result of a decrease in consulting costs of $1.3 million and a decrease in compensation
expense of $0.8 million. The decrease
in compensation expense is primarily due to a remeasurement of
obligations under long-term incentive plans associated with the
stock price. Other SG&A expenses increased by a net
$0.1 million.
SG&A expenses increased $1.1
million in the nine months ended September 30, 2020, compared to the corresponding
period in 2019, primarily due to an increase in consulting costs of
$1.7 million related to initiatives
including capital financing evaluation, claim recoveries and
international trade. Travel and recruiting expenses declined by a
total of $0.5 million and other
SG&A expenses declined by a net $0.1
million.
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.
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 but are not limited to the
following, which may be amplified by the novel coronavirus
(COVID-19) pandemic: 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, and risks relating to the 1992
Russian Suspension Agreement ("RSA"); 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 or delays in making timely payment;
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
DOE or other government agencies, 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 COVID-19
pandemic; 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, including under Part II, Item1A - "Risk
Factors" in this report and under Part I, Item1A - "Risk Factors"
in our Annual Report on Form 10-K for the year ended December 31, 2019.
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 be 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 Quarterly Report on Form 10-Q, except as required
by law.
Contacts:
Investors: Dan Leistikow (301)
564-3399 or LeistikowD@centrusenergy.com
Media: Lindsey Geisler (301)
564-3392 or GeislerLR@centrusenergy.com
CENTRUS ENERGY
CORP. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
(LOSS) (Unaudited; in millions, except
share and per share data)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue:
|
|
|
|
|
|
|
|
Separative work
units
|
$
|
0.1
|
|
|
$
|
75.0
|
|
|
$
|
89.4
|
|
|
$
|
87.4
|
|
Uranium
|
18.6
|
|
|
12.8
|
|
|
23.4
|
|
|
38.1
|
|
Technical
solutions
|
14.9
|
|
|
16.9
|
|
|
41.5
|
|
|
28.5
|
|
Total
revenue
|
33.6
|
|
|
104.7
|
|
|
154.3
|
|
|
154.0
|
|
Cost of
Sales:
|
|
|
|
|
|
|
|
Separative work units
and uranium
|
19.6
|
|
|
54.4
|
|
|
51.8
|
|
|
100.4
|
|
Technical
solutions
|
14.8
|
|
|
14.8
|
|
|
39.9
|
|
|
27.9
|
|
Total cost of
sales
|
34.4
|
|
|
69.2
|
|
|
91.7
|
|
|
128.3
|
|
Gross profit
(loss)
|
(0.8)
|
|
|
35.5
|
|
|
62.6
|
|
|
25.7
|
|
Advanced technology
costs
|
0.2
|
|
|
1.3
|
|
|
1.8
|
|
|
13.0
|
|
Selling, general and
administrative
|
6.7
|
|
|
8.7
|
|
|
25.6
|
|
|
24.5
|
|
Amortization of
intangible assets
|
1.2
|
|
|
1.8
|
|
|
4.3
|
|
|
4.1
|
|
Special charges
(credits) for workforce reductions
|
0.6
|
|
|
0.8
|
|
|
0.5
|
|
|
(2.2)
|
|
Gain on sales of
assets
|
—
|
|
|
(0.2)
|
|
|
—
|
|
|
(0.7)
|
|
Operating income
(loss)
|
(9.5)
|
|
|
23.1
|
|
|
30.4
|
|
|
(13.0)
|
|
Nonoperating
components of net periodic benefit expense (income)
|
(2.2)
|
|
|
(0.1)
|
|
|
(6.6)
|
|
|
(0.2)
|
|
Interest
expense
|
—
|
|
|
0.9
|
|
|
0.1
|
|
|
2.9
|
|
Investment
income
|
(0.1)
|
|
|
(0.5)
|
|
|
(0.5)
|
|
|
(1.9)
|
|
Income (loss) before
income taxes
|
(7.2)
|
|
|
22.8
|
|
|
37.4
|
|
|
(13.8)
|
|
Income tax expense
(benefit)
|
(0.2)
|
|
|
—
|
|
|
(0.6)
|
|
|
(0.1)
|
|
Net income (loss) and
comprehensive income (loss)
|
(7.0)
|
|
|
22.8
|
|
|
38.0
|
|
|
(13.7)
|
|
Preferred stock
dividends - undeclared and cumulative
|
1.9
|
|
|
1.9
|
|
|
5.9
|
|
|
5.9
|
|
Net income (loss)
allocable to common stockholders
|
$
|
(8.9)
|
|
|
$
|
20.9
|
|
|
$
|
32.1
|
|
|
$
|
(19.6)
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.83)
|
|
|
$
|
2.18
|
|
|
$
|
3.21
|
|
|
$
|
(2.05)
|
|
Diluted
|
$
|
(0.83)
|
|
|
$
|
2.17
|
|
|
$
|
3.12
|
|
|
$
|
(2.05)
|
|
Average number of
common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
Basic
|
10,723
|
|
|
9,582
|
|
|
10,008
|
|
|
9,560
|
|
Diluted
|
10,723
|
|
|
9,626
|
|
|
10,282
|
|
|
9,560
|
|
CENTRUS ENERGY
CORP. CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited; in millions, except share and per
share data)
|
|
|
September
30, 2020
|
|
December
31, 2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
152.8
|
|
|
$
|
130.7
|
|
Accounts
receivable
|
14.1
|
|
|
21.1
|
|
Inventories
|
66.6
|
|
|
64.5
|
|
Deferred costs
associated with deferred revenue
|
145.4
|
|
|
144.1
|
|
Other current
assets
|
7.4
|
|
|
9.2
|
|
Total current
assets
|
386.3
|
|
|
369.6
|
|
Property, plant and
equipment, net of accumulated depreciation of $2.5 as of September
30, 2020 and $2.2 as of December 31, 2019
|
4.4
|
|
|
3.7
|
|
Deposits for
financial assurance
|
5.7
|
|
|
5.7
|
|
Intangible assets,
net
|
65.2
|
|
|
69.5
|
|
Other long-term
assets
|
6.6
|
|
|
7.4
|
|
Total
assets
|
$
|
468.2
|
|
|
$
|
455.9
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
52.2
|
|
|
$
|
50.7
|
|
Payables under SWU
purchase agreements
|
—
|
|
|
8.1
|
|
Inventories owed to
customers and suppliers
|
7.8
|
|
|
5.6
|
|
Deferred revenue and
advances from customers
|
249.7
|
|
|
266.3
|
|
Current
debt
|
6.1
|
|
|
6.1
|
|
Total current
liabilities
|
315.8
|
|
|
336.8
|
|
Long-term
debt
|
108.0
|
|
|
114.1
|
|
Postretirement health
and life benefit obligations
|
131.3
|
|
|
138.6
|
|
Pension benefit
liabilities
|
121.2
|
|
|
141.8
|
|
Advances from
customers
|
44.9
|
|
|
29.4
|
|
Other long-term
liabilities
|
22.6
|
|
|
32.1
|
|
Total
liabilities
|
743.8
|
|
|
792.8
|
|
Commitments and
contingencies (Note 13)
|
|
|
|
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 $133.1 as of
September 30, 2020 and $127.2 as of December 31, 2019
|
4.6
|
|
|
4.6
|
|
Class A Common Stock,
par value $0.10 per share, 70,000,000 shares authorized, 11,320,689
and 8,347,427 shares issued and outstanding as of September 30,
2020 and December 31, 2019, respectively
|
1.1
|
|
|
0.8
|
|
Class B Common Stock,
par value $0.10 per share, 30,000,000 shares authorized, 719,200
and 1,117,462 shares issued and outstanding as of September 30,
2020 and December 31, 2019, respectively
|
0.1
|
|
|
0.1
|
|
Excess of capital over
par value
|
84.8
|
|
|
61.5
|
|
Accumulated
deficit
|
(367.0)
|
|
|
(405.0)
|
|
Accumulated other
comprehensive income, net of tax
|
0.8
|
|
|
1.1
|
|
Total stockholders'
deficit
|
(275.6)
|
|
|
(336.9)
|
|
Total liabilities and
stockholders' deficit
|
$
|
468.2
|
|
|
$
|
455.9
|
|
CENTRUS ENERGY
CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (Unaudited; in
millions)
|
|
|
Nine Months
Ended
September 30,
|
|
2020
|
|
2019
|
OPERATING
|
|
|
|
Net income
(loss)
|
$
|
38.0
|
|
|
$
|
(13.7)
|
|
Adjustments to
reconcile net income (loss) to cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
4.7
|
|
|
4.5
|
|
PIK interest on
paid-in-kind toggle notes
|
—
|
|
|
1.1
|
|
Gain on sales of
assets
|
—
|
|
|
(0.7)
|
|
Inventory valuation
adjustments
|
—
|
|
|
2.3
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
7.0
|
|
|
31.3
|
|
Inventories,
net
|
17.1
|
|
|
(9.3)
|
|
Accounts payable and
other liabilities
|
(0.3)
|
|
|
(11.2)
|
|
Payables under SWU
purchase agreements
|
(8.1)
|
|
|
(33.0)
|
|
Deferred revenue and
advances from customers, net of deferred costs
|
(17.5)
|
|
|
18.9
|
|
Accrued loss on
long-term contract
|
(8.7)
|
|
|
—
|
|
Pension and
postretirement benefit liabilities
|
(28.1)
|
|
|
(15.9)
|
|
Other, net
|
1.1
|
|
|
(0.8)
|
|
Cash provided by (used
in) operating activities
|
5.2
|
|
|
(26.5)
|
|
|
|
|
|
INVESTING
|
|
|
|
Capital
expenditures
|
(0.9)
|
|
|
—
|
|
Proceeds from sales
of assets
|
—
|
|
|
0.7
|
|
Cash (used in)
provided by investing activities
|
(0.9)
|
|
|
0.7
|
|
|
|
|
|
FINANCING
|
|
|
|
Proceeds from the
sale of common stock, net
|
23.8
|
|
|
—
|
|
Exercise of stock
options
|
0.2
|
|
|
—
|
|
Principal payments on
debt
|
—
|
|
|
(27.5)
|
|
Payment of deferred
issuance costs
|
(0.1)
|
|
|
(0.2)
|
|
Payment of interest
classified as debt
|
(6.1)
|
|
|
(6.1)
|
|
Cash provided by
(used) in financing activities
|
17.8
|
|
|
(33.8)
|
|
|
|
|
|
Increase (decrease)
in cash, cash equivalents and restricted cash
|
22.1
|
|
|
(59.6)
|
|
Cash, cash
equivalents and restricted cash, beginning of period (Note
4)
|
136.6
|
|
|
159.7
|
|
Cash, cash
equivalents and restricted cash, end of period (Note 4)
|
$
|
158.7
|
|
|
$
|
100.1
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Interest paid in
cash
|
$
|
—
|
|
|
$
|
1.5
|
|
Non-cash
activities:
|
|
|
|
Conversion of interest
payable-in-kind to debt
|
$
|
—
|
|
|
$
|
0.7
|
|
Deferred financing
costs included in accounts payable and accrued
liabilities
|
$
|
0.7
|
|
|
$
|
0.4
|
|
Right to use lease
assets acquired under operating leases
|
$
|
—
|
|
|
$
|
2.9
|
|
Disposal of right to
use lease assets for early termination
|
$
|
—
|
|
|
$
|
0.2
|
|
Property, plant and
equipment included in accounts payable and accrued
liabilities
|
$
|
0.1
|
|
|
$
|
—
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/centrus-reports-third-quarter-2020-results-301172409.html
SOURCE Centrus Energy Corp.