BETHESDA, Md., May 11, 2021 /PRNewswire/ -- Centrus Energy
Corp. (NYSE American: LEU) today reported net income of
$5.1 million for the quarter ended
March 31, 2021, compared to a net
income of $11.3 million for the first
quarter of 2020. The net loss allocable to common stockholders of
$2.2 million, or $0.17 (basic and diluted) per common share under
GAAP was the result of an exchange of common for preferred shares.
Without giving effect to the exchange, on a non-GAAP basis the
adjusted net income per share was $0.34 (basic) and $0.33 (diluted) (see Non-GAAP description and
reconciliation table below).
"As I noted in our annual shareholder letter, Centrus continues
to make progress, building on our return to profitability in 2020.
With new sales commitments and the continued progress on the HALEU
program, we're in a good position moving forward," said
Dan Poneman, Centrus president and
chief executive officer. "We are focusing every day on our
customers' needs for the future, while continuing the hard work
we've done in recent years to reduce our debt and lower our cost
structure. We are also encouraged that the new Administration has
recognized the important role that zero-carbon nuclear power can
play in the transition to a clean energy future."
Financial Results
Centrus generated total revenue of $55.6
million for the first quarter of 2021, an increase of
$10.6 million, or 24%, from the prior
year period. Our order book increased from $969 million as of March
31, 2020, to $989 million as
of March 31, 2021, including
approximately $300 million in
deferred revenue and advances from customers in each case.
Revenue from the LEU segment increased $7.4 million in the three months ended
March 31, 2021, compared to the
corresponding period in 2020 resulting primarily from increased
volume. The average price per SWU decreased 17% in the
three-month period compared to 2020, reflecting the particular
contracts under which SWU were sold during the periods. There were
no uranium sales in either period.
Cost of sales for the LEU segment increased $12.1 million in the three months ended
March 31, 2021, compared to the
corresponding period in 2020 primarily due to increased volume.
Cost of sales includes $15.9 million
of previously deferred costs from Deferred Costs Associated with
Deferred Revenue that reflect higher inventory costs from
previous years. Cost of sales also includes legacy costs related to
former employees of the Portsmouth
and Paducah Gaseous Diffusion Plants of $0.7
million in the three months ended March 31, 2021, compared to $1.0 million in the corresponding period in 2020.
Excluding legacy costs and previously deferred sales, the average
unit cost of sales for SWU decreased 14% in the three months ended
March 31, 2021, compared to the
corresponding period in 2020.
Revenue from the technical solutions segment increased
$3.2 million in the three months
ended March 31, 2021, compared to the
corresponding period in 2020, reflecting increased work performed
under the HALEU and X-energy contracts. Revenue in the prior period
included work performed under a contract with UT-Battelle LLC.
Cost of sales for the technical solutions segment increased
$6.4 million in the three months
ended March 31, 2021, compared to the
corresponding period in 2020, reflecting the increase in contract
work performed. Cost of sales benefited by $2.0 million in the current period and
$3.0 million in the prior period for
previously accrued contract losses attributable to work performed
under the HALEU Contract.
Centrus realized a gross profit of $11.7
million in the three months ended March 31, 2021, compared to a gross profit of
$19.6 million in the corresponding
period in 2020.
Selling, general and administrative expenses decreased
$0.3 million in the three months
ended March 31, 2021, compared to the
corresponding period in 2020. Consulting costs decreased
$1.1 million and salaries and
benefits decreased $0.2 million.
Incentive compensation expense increased $1.2 million, primarily related to a
remeasurement of obligations under long-term incentive plans which
are based on our stock price. Other SG&A expenses decreased by
a net $0.2 million. We ended the
first quarter of 2021 with a consolidated cash balance of
$163.3 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 are, and will be, exacerbated by the novel
coronavirus (COVID-19) pandemic and any worsening of the global
business and economic environment as a result: 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; 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;
risks related to pandemics and other health crises, such as the
global COVID-19 pandemic; the impact and potential extended
duration of the current supply/demand imbalance in the market for
low-enriched uranium ("LEU"); risks related to our ability to sell
the LEU we procure pursuant to our purchase obligations under our
supply agreements; risks related to the imposition of sanctions,
restrictions or other requirements, including those imposed under
the 1992 Russian Suspension Agreement ("RSA"), as amended,
international trade legislation and other international trade
restrictions; risks related to existing or new trade barriers and
contract terms that limit our ability to deliver LEU to customers;
pricing trends and demand in the uranium and enrichment markets and
their impact on our profitability; movement and timing of customer
orders; 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 associated with our reliance on
third-party suppliers to provide essential products and services to
us; the fact that we face significant competition from major
producers who may be less cost sensitive or are wholly or partially
government owned; limitations on our ability to compete in foreign
markets; our revenue is largely dependent on our largest customers;
risks related to our sales order book, including uncertainty
concerning customer actions under current contracts and in future
contracting due to market conditions and our lack of current
production capability; risks related to whether or when government
funding or demand for high-assay low-enriched uranium ("HALEU") for
government or commercial uses will materialize; risks and
uncertainties regarding funding for continuation and 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 HALEU and our ability to obtain and/or
perform under other agreements; uncertainty regarding our ability
to commercially deploy competitive enrichment technology; the
potential for further demobilization or termination of our American
Centrifuge work; risks that we will not be able to timely complete
the work that we are obligated to perform; risks related to our
ability to perform fixed-price and cost-share contracts, including
the risk that costs could be higher than expected; 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; the risks of
revenue and operating results fluctuating significantly from
quarter to quarter, and in some cases, year to year; the impact of
financial market conditions on our business, liquidity, prospects,
pension assets and insurance facilities; risks related to the
Company's capital concentration; risks related to the value of our
intangible assets related to the sales order book and customer
relationships; risks related to the limited trading markets in our
securities; 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 that a small
number of Class A stockholders, whose interests may not be aligned
with other Class A stockholders, may exert significant influence
over the direction of the Company; 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; failures or security
breaches of our information technology systems; our ability to
attract and retain key personnel; the potential for the U.S.
Department of Energy ("DOE") to seek to terminate or exercise its
remedies under its agreements with the Company; 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; risks related to our ability to perform and receive timely
payment under agreements with DOE or other government agencies,
including risks and uncertainties related to the ongoing funding by
the government and potential audits; any changes or termination of
agreements with the U.S. government; the competitive environment
for our products and services; changes in the nuclear energy
industry; the competitive bidding process associated with obtaining
contracts, including government contracts; 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; potential strategic transactions that
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 impact of government regulation and
policies including by the DOE and the U.S. Nuclear Regulatory
Commission; risks of accidents during the transportation, handling
or processing of hazardous or radioactive material that may pose a
health risk to humans or animals, cause property or environmental
damage, or result in precautionary evacuations; risks associated
with claims and litigation arising from past activities at sites
that we no longer operate, including the Paducah, Kentucky, and Portsmouth, Ohio, gaseous diffusion plants;
and other risks and uncertainties discussed in this and our other
filings with the Securities and Exchange Commission, including
under Part I, Item1A - "Risk Factors" in our Annual Report on Form
10-K for the year ended December 31,
2020.
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
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.
ADJUSTED NET INCOME PER
SHARE RECONCILIATION TABLE
The Company measures Net Income per Share both on a GAAP basis
and adjusted to exclude deemed dividends allocable to retired
preferred stock shares ("Adjusted Net Income per Share"). We
believe Adjusted Net Income per Share, a non-GAAP financial
measure, provides investors with additional understanding of the
Company's financial performance and period-to-period
comparability.
On February 2, 2021, the Company
completed the exchange of 3,873 shares of its outstanding Preferred
Stock, for (i) 231,276 shares of its Class A Common Stock, and (ii)
the Warrant to purchase 250,000 shares of Common Stock at an
exercise price of $21.62 per share,
for an aggregate valuation of approximately $7.5 million. The carrying value on the Balance
Sheet was $1.00 per share par value.
The aggregate liquidation preference, including accrued but unpaid
dividends, was $1,291.04 per share as
of December 31, 2020.
The aggregate valuation of approximately $7.5 million, less accrued but unpaid dividends
attributable to the acquired and retired Series B preferred shares,
is considered for purposes of Net Income per Share to be a deemed
dividend to the extent it exceeds the carrying value on the Balance
Sheet, or $6.6 million.
Below we present Net Income Per Share and Adjusted Net Income
per Share. The non-GAAP financial measure is used in addition to
and in conjunction with results presented in accordance with our
GAAP results. The non-GAAP financial measure should be viewed in
addition to, and not as a substitute for, or superior to, the
financial measure calculated in accordance with GAAP. The non-GAAP
financial measure used by the Company may be calculated differently
from, and therefore may not be comparable to, non-GAAP financial
measures used by other companies.
|
Three Months
Ended March
31,
|
|
2021
|
|
2020
|
Numerator (in
millions):
|
|
|
|
Net income
|
$
|
5.1
|
|
|
$
|
11.3
|
|
Less: Preferred stock
dividends - undeclared and cumulative
|
0.7
|
|
|
2.0
|
|
Less: Distributed
earnings allocable to retired preferred shares
|
6.6
|
|
|
—
|
|
Net income (loss)
allocable to common stockholders
|
$
|
(2.2)
|
|
|
$
|
9.3
|
|
|
|
|
|
Adjusted net income,
including distributed earnings allocable to retired preferred
shares (Non-GAAP)
|
$
|
4.4
|
|
|
$
|
9.3
|
|
|
|
|
|
Denominator (in
thousands) (a):
|
|
|
|
Average common shares
outstanding - basic
|
12,818
|
|
|
9,619
|
|
Average common shares
outstanding – diluted (b)
|
12,818
|
|
|
9,839
|
|
|
|
|
|
Net Income
(Loss) per Share (in dollars):
|
|
|
|
Basic
|
$
|
(0.17)
|
|
|
$
|
0.97
|
|
Diluted
|
$
|
(0.17)
|
|
|
$
|
0.95
|
|
|
|
|
|
Adjusted Net Income
per Share (Non-GAAP) (in dollars):
|
|
|
|
Basic
|
$
|
0.34
|
|
|
$
|
0.97
|
|
Diluted
|
$
|
0.33
|
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
For details related
to average shares outstanding, refer to Note 9, Net Income Per
Share of the unaudited condensed consolidated financial
statements.
|
(b)
|
No dilutive effect is
recognized in a period in which a net loss has occurred. For
purposes of Adjusted Net Income per Share for the three months
ended March 31, 2021, average common shares outstanding - diluted
is 13,196,000 shares.
|
CENTRUS ENERGY
CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
|
(Unaudited; in millions, except
share and per share data)
|
|
|
Three Months
Ended
March 31,
|
|
2021
|
|
2020
|
Revenue:
|
|
|
|
Separative work
units
|
$
|
38.1
|
|
|
$
|
30.7
|
|
Uranium
|
—
|
|
|
—
|
|
Technical
solutions
|
17.5
|
|
|
14.3
|
|
Total
revenue
|
55.6
|
|
|
45.0
|
|
Cost of
Sales:
|
|
|
|
Separative work units
and uranium
|
25.4
|
|
|
13.3
|
|
Technical
solutions
|
18.5
|
|
|
12.1
|
|
Total cost of
sales
|
43.9
|
|
|
25.4
|
|
Gross
profit
|
11.7
|
|
|
19.6
|
|
Advanced technology
costs
|
0.5
|
|
|
0.9
|
|
Selling, general and
administrative
|
8.2
|
|
|
8.5
|
|
Amortization of
intangible assets
|
2.1
|
|
|
1.4
|
|
Other (income)
expense, net
|
—
|
|
|
(0.1)
|
|
Operating
income
|
0.9
|
|
|
8.9
|
|
Nonoperating
components of net periodic benefit expense (income)
|
(4.3)
|
|
|
(2.2)
|
|
Interest
expense
|
—
|
|
|
0.1
|
|
Investment
income
|
—
|
|
|
(0.4)
|
|
Income before income
taxes
|
5.2
|
|
|
11.4
|
|
Income tax
expense
|
0.1
|
|
|
0.1
|
|
Net income and
comprehensive income
|
5.1
|
|
|
11.3
|
|
Preferred stock
dividends - undeclared and cumulative
|
0.7
|
|
|
2.0
|
|
Distributed earnings
allocable to retired preferred shares
|
6.6
|
|
|
—
|
|
Net income (loss)
allocable to common stockholders
|
$
|
(2.2)
|
|
|
$
|
9.3
|
|
|
|
|
|
Net income (loss) per
share:
|
|
|
|
Basic
|
$
|
(0.17)
|
|
|
$
|
0.97
|
|
Diluted
|
$
|
(0.17)
|
|
|
$
|
0.95
|
|
Average number of
common shares outstanding (in thousands):
|
|
|
|
Basic
|
12,818
|
|
|
9,619
|
|
Diluted
|
12,818
|
|
|
9,839
|
|
CENTRUS ENERGY
CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited; in
millions, except share and per share data)
|
|
|
March 31,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
163.3
|
|
|
$
|
152.0
|
|
Accounts
receivable
|
15.5
|
|
|
29.6
|
|
Inventories
|
83.5
|
|
|
64.8
|
|
Deferred costs
associated with deferred revenue
|
136.0
|
|
|
151.9
|
|
Other current
assets
|
7.8
|
|
|
7.8
|
|
Total current
assets
|
406.1
|
|
|
406.1
|
|
Property, plant and
equipment, net of accumulated depreciation of $2.8 as of March 31,
2021 and $2.7 as of December 31, 2020
|
5.0
|
|
|
4.9
|
|
Deposits for
financial assurance
|
5.7
|
|
|
5.7
|
|
Intangible assets,
net
|
60.7
|
|
|
62.8
|
|
Other long-term
assets
|
6.2
|
|
|
6.8
|
|
Total
assets
|
$
|
483.7
|
|
|
$
|
486.3
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
47.1
|
|
|
$
|
50.6
|
|
Payables under SWU
purchase agreements
|
16.9
|
|
|
21.3
|
|
Inventories owed to
customers and suppliers
|
13.3
|
|
|
4.9
|
|
Deferred revenue and
advances from customers
|
255.5
|
|
|
283.2
|
|
Current
debt
|
6.1
|
|
|
6.1
|
|
Total current
liabilities
|
338.9
|
|
|
366.1
|
|
Long-term
debt
|
104.9
|
|
|
108.0
|
|
Postretirement health
and life benefit obligations
|
128.9
|
|
|
130.8
|
|
Pension benefit
liabilities
|
119.0
|
|
|
124.4
|
|
Advances from
customers
|
44.4
|
|
|
45.2
|
|
Other long-term
liabilities
|
32.4
|
|
|
32.4
|
|
Total
liabilities
|
768.5
|
|
|
806.9
|
|
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, 37,847 and 41,720 shares issued
and outstanding as of March 31, 2021 and December 31, 2020,
respectively; aggregate liquidation preference of $49.6 as of March
31, 2021 and $53.9 as of December 31, 2020
|
0.1
|
|
|
0.1
|
|
Class A Common Stock,
par value $0.10 per share, 70,000,000 shares authorized, 12,764,578
and 11,390,189 shares issued and outstanding as of March 31, 2021
and December 31, 2020, respectively
|
1.2
|
|
|
1.1
|
|
Class B Common Stock,
par value $0.10 per share, 30,000,000 shares authorized, 719,200
shares issued and outstanding as of March 31, 2021 and December 31,
2020
|
0.1
|
|
|
0.1
|
|
Excess of capital over
par value
|
123.3
|
|
|
85.0
|
|
Accumulated
deficit
|
(410.2)
|
|
|
(407.7)
|
|
Accumulated other
comprehensive income, net of tax
|
0.7
|
|
|
0.8
|
|
Total stockholders'
deficit
|
(284.8)
|
|
|
(320.6)
|
|
Total liabilities and
stockholders' deficit
|
$
|
483.7
|
|
|
$
|
486.3
|
|
CENTRUS ENERGY
CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited; in
millions)
|
|
|
Three Months Ended
March 31,
|
|
2021
|
|
2020
|
OPERATING
|
|
|
|
Net income
|
$
|
5.1
|
|
|
$
|
11.3
|
|
Adjustments to
reconcile net income to cash used in operating
activities:
|
|
|
|
Depreciation and
amortization
|
2.2
|
|
|
1.5
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
14.2
|
|
|
3.6
|
|
Inventories,
net
|
(10.3)
|
|
|
0.1
|
|
Accounts payable and
other liabilities
|
6.6
|
|
|
1.3
|
|
Payables under SWU
purchase agreements
|
(4.4)
|
|
|
(1.9)
|
|
Deferred revenue and
advances from customers, net of deferred costs
|
(12.5)
|
|
|
(23.3)
|
|
Accrued loss on
long-term contract
|
(2.0)
|
|
|
(3.5)
|
|
Pension and
postretirement benefit liabilities
|
(7.4)
|
|
|
(8.6)
|
|
Other, net
|
—
|
|
|
1.0
|
|
Cash (used in)
operating activities
|
(8.5)
|
|
|
(18.5)
|
|
|
|
|
|
INVESTING
|
|
|
|
Capital
expenditures
|
(0.4)
|
|
|
—
|
|
Cash (used in)
investing activities
|
(0.4)
|
|
|
—
|
|
|
|
|
|
FINANCING
|
|
|
|
Proceeds from the
sale of common stock, net
|
23.2
|
|
|
—
|
|
Exercise of stock
options
|
0.2
|
|
|
0.2
|
|
Payment of deferred
issuance costs
|
—
|
|
|
(0.1)
|
|
Payment of equity
issuance costs
|
(0.1)
|
|
|
—
|
|
Payment of interest
classified as debt
|
(3.1)
|
|
|
(3.1)
|
|
Cash provided by
(used) in financing activities
|
20.2
|
|
|
(3.0)
|
|
|
|
|
|
Increase (decrease)
in cash, cash equivalents and restricted cash
|
11.3
|
|
|
(21.5)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
157.9
|
|
|
136.6
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
169.2
|
|
|
$
|
115.1
|
|
|
|
|
|
Non-cash
activities:
|
|
|
|
Common stock and
warrant issued in exchange for preferred stock
|
$
|
7.5
|
|
|
$
|
—
|
|
Reclassification of
stock-based compensation liability to equity
|
$
|
7.5
|
|
|
$
|
—
|
|
Equity issuance costs
included in accounts payable and accrued liabilities
|
$
|
0.4
|
|
|
$
|
—
|
|
Property, plant and
equipment included in accounts payable and accrued
liabilities
|
$
|
0.1
|
|
|
$
|
—
|
|
Deferred financing
costs included in accounts payable and accrued
liabilities
|
$
|
—
|
|
|
$
|
(0.5)
|
|
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SOURCE Centrus Energy Corp.