BETHESDA, Md., May 11, 2020 /PRNewswire/ -- Centrus Energy
Corp. (NYSE American: LEU) today reported net income of
$11.3 million for the quarter ended
March 31, 2020, compared to a net
loss of $20.9 million for the first
quarter of 2019. The net income allocable to common stockholders
was $9.3 million, or $0.97 (basic) and $0.95 (diluted) per common share, compared to a
net loss allocable to common stockholders of $22.9 million or $2.40 per common share (basic and diluted), for
the first quarter of 2019.
"I am pleased that, in this challenging time, we are able to
report a positive net income for the quarter. This is the result of
the hard work we've done in recent years to diversify our business,
reduce our debt, and lower our cost structure," said Dan Poneman, Centrus president and chief
executive officer. "We are continuing to make progress on the HALEU
program, even as we have limited our operations to protect the
health and safety of our employees and their families."
Poneman also welcomed Secretary of Energy Brouillette's recent
release of the Nuclear Fuel Working Group report, which called for
"immediate action to support domestic uranium miners and restore
the viability of the entire front-end of the nuclear fuel
cycle."
In addition, last month, Centrus also signed a nonbinding Letter
of Intent with Advanced Reactor Concepts (ARC), reflecting the
parties' long-term commitment to enter into a purchase agreement
that would enable Centrus to supply commercial HALEU that ARC needs
to deploy its reactor technology in the late 2020s.
Financial Results
Centrus generated total revenue of $45.0
million for the first quarter of 2020, an increase of
$6.3 million, or 16%, from the prior
year period.
Revenue from the LEU segment declined $4.4 million (or 13%) in the three months ended
March 31, 2020, compared to the
corresponding period in 2019, primarily because there were no
uranium sales in the period. Revenue from the sales of SWU
increased $18.3 million (or 148%),
reflecting an increase in the average SWU selling price partially
offset by a 7% decline in sales volume. The average price billed to
customers for sales of SWU increased 166%, reflecting the
particular contracts under which SWU were sold during the periods.
Cost of sales for the LEU segment declined $25.0 million (or 65%) in the three months ended
March 31, 2020, compared to the
corresponding period in 2019, reflecting declines in SWU and
uranium sales volumes and a decline in the average cost of sales
per SWU. The average cost of sales per SWU declined approximately
26% in the three months ended March 31,
2020, compared to the corresponding period in 2019,
primarily due to lower pricing in supply contracts. There were no
uranium sales in the three months ended March 31, 2020.
Revenue from the technical solutions segment increased
$10.7 million (or 297%) in the three
months ended March 31, 2020, compared
to the corresponding period in 2019. The increase was primarily the
result of work performed under the high-assay, low-enriched uranium
(HALEU) contract. Revenue in the current period included work
performed under the UT-Battelle contract and revenue in the prior
period included work performed under the K-1600 decontamination and
decommissioning (D&D) contract that was completed in 2019. Cost
of sales for the technical solutions segment increased $6.2 million (or 105%) in the three months ended
March 31, 2020, compared to the
corresponding period in 2019, reflecting the mix of technical
solutions work performed in each of the periods including work
performed under the HALEU contract in the current period.
Centrus realized a gross profit of $19.6
million in the three months ended March 31, 2020, an improvement of $25.1 million compared to the gross loss of
$5.5 million in the corresponding
period in 2019. We ended the first quarter of 2020 with a
consolidated cash balance of $109.2
million.
As we have noted in recent years our revenues can vary
significantly from quarter to quarter depending upon the timing of
when customers elect to take their annual deliveries and other
factors. Therefore, our operating results and cash flows can
fluctuate significantly from quarter to quarter and year to
year. Operating results for the three months ended
March 31, 2020, are not necessarily
indicative of the results that may be expected for the year ending
December 31, 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 Quarterly Report on Form 10-Q, including Management's
Discussion and Analysis of Financial Condition and Results of
Operations in Part I, Item 2, 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
potential expiration of the 1992 Russian Suspension Agreement
("RSA") and/or a renewal of the RSA on terms not favorable to us or
legislation imposing new or increased limits on imports of Russian
LEU; 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 1. 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
March 31,
|
|
2020
|
|
2019
|
Revenue:
|
|
|
|
Separative work
units
|
$
|
30.7
|
|
|
$
|
12.4
|
|
Uranium
|
—
|
|
|
22.7
|
|
Technical
solutions
|
14.3
|
|
|
3.6
|
|
Total
revenue
|
45.0
|
|
|
38.7
|
|
Cost of
Sales:
|
|
|
|
Separative work units
and uranium
|
13.3
|
|
|
38.3
|
|
Technical
solutions
|
12.1
|
|
|
5.9
|
|
Total cost of
sales
|
25.4
|
|
|
44.2
|
|
Gross profit
(loss)
|
19.6
|
|
|
(5.5)
|
|
Advanced technology
costs
|
0.9
|
|
|
6.6
|
|
Selling, general and
administrative
|
8.5
|
|
|
8.1
|
|
Amortization of
intangible assets
|
1.4
|
|
|
1.1
|
|
Special charges
(credits) for workforce reductions
|
(0.1)
|
|
|
(0.1)
|
|
Gain on sales of
assets
|
—
|
|
|
(0.4)
|
|
Operating income
(loss)
|
8.9
|
|
|
(20.8)
|
|
Nonoperating
components of net periodic benefit expense (income)
|
(2.2)
|
|
|
(0.1)
|
|
Interest
expense
|
0.1
|
|
|
1.0
|
|
Investment
income
|
(0.4)
|
|
|
(0.7)
|
|
Income (loss) before
income taxes
|
11.4
|
|
|
(21.0)
|
|
Income tax expense
(benefit)
|
0.1
|
|
|
(0.1)
|
|
Net income (loss) and
comprehensive income (loss)
|
11.3
|
|
|
(20.9)
|
|
Preferred stock
dividends - undeclared and cumulative
|
2.0
|
|
|
2.0
|
|
Net income (loss)
allocable to common stockholders
|
$
|
9.3
|
|
|
$
|
(22.9)
|
|
|
|
|
|
Net income (loss) per
common share:
|
|
|
|
Basic
|
$
|
0.97
|
|
|
$
|
(2.40)
|
|
Diluted
|
$
|
0.95
|
|
|
$
|
(2.40)
|
|
Average number of
common shares outstanding (in thousands):
|
|
|
|
Basic
|
9,619
|
|
|
9,532
|
|
Diluted
|
9,839
|
|
|
9,532
|
|
CENTRUS ENERGY
CORP.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited; in
millions, except share and per share data)
|
|
|
March 31,
2020
|
|
December 31,
2019
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
109.2
|
|
|
$
|
130.7
|
|
Accounts
receivable
|
17.5
|
|
|
21.1
|
|
Inventories
|
67.9
|
|
|
64.5
|
|
Deferred costs
associated with deferred revenue
|
144.1
|
|
|
144.1
|
|
Other current
assets
|
7.8
|
|
|
9.2
|
|
Total current
assets
|
346.5
|
|
|
369.6
|
|
Property, plant and
equipment, net of accumulated depreciation of $2.3 as of March 31,
2020 and
$2.2 as of December 31,
2019
|
3.6
|
|
|
3.7
|
|
Deposits for
financial assurance
|
5.7
|
|
|
5.7
|
|
Intangible assets,
net
|
68.1
|
|
|
69.5
|
|
Other long-term
assets
|
6.9
|
|
|
7.4
|
|
Total
assets
|
$
|
430.8
|
|
|
$
|
455.9
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
50.7
|
|
|
$
|
50.7
|
|
Payables under SWU
purchase agreements
|
6.1
|
|
|
8.1
|
|
Inventories owed to
customers and suppliers
|
7.4
|
|
|
5.6
|
|
Deferred revenue and
advances from customers
|
243.0
|
|
|
266.3
|
|
Current
debt
|
6.1
|
|
|
6.1
|
|
Total current
liabilities
|
313.3
|
|
|
336.8
|
|
Long-term
debt
|
111.0
|
|
|
114.1
|
|
Postretirement health
and life benefit obligations
|
134.7
|
|
|
138.6
|
|
Pension benefit
liabilities
|
137.2
|
|
|
141.8
|
|
Advances from
customers
|
29.4
|
|
|
29.4
|
|
Other long-term
liabilities
|
30.6
|
|
|
32.1
|
|
Total
liabilities
|
756.2
|
|
|
792.8
|
|
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 $129.2 as of March 31, 2020 and $127.2 as of December
31, 2019
|
—
|
|
|
—
|
|
Class A Common Stock,
par value $0.10 per share, 70,000,000 shares authorized, 8,783,189
and
8,347,427 shares issued and
outstanding as of March 31, 2020 and December 31, 2019,
respectively
|
4.6
|
|
|
4.6
|
|
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 March 31, 2020 and December 31, 2019,
respectively
|
0.8
|
|
|
0.8
|
|
Excess of capital
over par value
|
0.1
|
|
|
0.1
|
|
Accumulated
deficit
|
61.8
|
|
|
61.5
|
|
Accumulated other
comprehensive income, net of tax
|
(393.7)
|
|
|
(405.0)
|
|
Total stockholders'
deficit
|
1.0
|
|
|
1.1
|
|
Total liabilities and
stockholders' deficit
|
(325.4)
|
|
|
(336.9)
|
|
|
$
|
430.8
|
|
|
$
|
455.9
|
|
CENTRUS ENERGY
CORP.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited; in
millions)
|
|
|
Three Months
Ended
March 31,
|
|
2020
|
|
2019
|
OPERATING
|
|
|
|
Net income
(loss)
|
$
|
11.3
|
|
|
$
|
(20.9)
|
|
Adjustments to
reconcile net loss to cash used in operating activities:
|
|
|
|
Depreciation and
amortization
|
1.5
|
|
|
1.3
|
|
PIK interest on
paid-in-kind toggle notes
|
—
|
|
|
0.4
|
|
Gain on sales of
assets
|
—
|
|
|
(0.4)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
3.6
|
|
|
11.2
|
|
Inventories,
net
|
0.1
|
|
|
25.6
|
|
Accounts payable and
other liabilities
|
1.3
|
|
|
1.2
|
|
Payables under SWU
purchase agreements
|
(1.9)
|
|
|
(46.0)
|
|
Deferred revenue and
advances from customers, net of deferred costs
|
(23.3)
|
|
|
—
|
|
Accrued loss on
long-term contract
|
(3.5)
|
|
|
—
|
|
Pension and
postretirement benefit liabilities
|
(8.6)
|
|
|
(4.2)
|
|
Other, net
|
1.0
|
|
|
(0.1)
|
|
Cash used in operating
activities
|
(18.5)
|
|
|
(31.9)
|
|
|
|
|
|
INVESTING
|
—
|
|
|
—
|
|
|
|
|
|
FINANCING
|
|
|
|
Payments for deferred
financing costs
|
(0.1)
|
|
|
—
|
|
Exercise of stock
options
|
0.2
|
|
|
—
|
|
Payment of interest
classified as debt
|
(3.1)
|
|
|
(3.1)
|
|
Cash used in financing
activities
|
(3.0)
|
|
|
(3.1)
|
|
|
|
|
|
Decrease in cash,
cash equivalents and restricted cash
|
(21.5)
|
|
|
(35.0)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
136.6
|
|
|
159.7
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
115.1
|
|
|
$
|
124.7
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
|
|
Interest paid in
cash
|
$
|
—
|
|
|
$
|
0.4
|
|
Non-cash
activities:
|
|
|
|
Conversion of
interest payable-in-kind to debt
|
$
|
—
|
|
|
$
|
0.7
|
|
Deferred financing
costs included in accounts payable and accrued
liabilities
|
$
|
(0.5)
|
|
|
$
|
—
|
|
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SOURCE Centrus Energy Corp.