First Quarter Results
The company’s gross profit for the first quarter of 2009 was $50.6 million, compared with $73.5 million in the year-ago quarter. The selling, general and administrative expenses for the first quarter of 2009 were $30.8 million, compared with $28.3 million in the year-ago quarter.
The net income attributable to EnergySolutions for the first quarter of 2009 was $8.1 million, or $0.09 per share, compared with $19.3 million, or $0.22 per share, in the year-ago quarter. The net income attributable to EnergySolutions before the non-cash impact of amortization of intangible assets for the first quarter of 2009 was $12.7 million, or $0.14 per share, compared with the year-ago quarter of $23.8 million, or $0.27 per share. EBITDA for the first quarter of 2009 was $32.6 million, compared with $57.7 million in the year-ago quarter.
Business Segments – First Quarter 2009
The company’s four business segments results, on a GAAP basis.
Federal Services
The Federal Services revenues for the first quarter of 2009 were $66.1 million against $44.6 million in the year-ago quarter. The revenues increased $8.8 million due to the inclusion of a full quarter’s operating results of a joint venture which EnergySolutions assumed voting control for on March 14, 2008 at the request of its customer, the Department of Energy (DOE). The revenues also rose due to several new engineering and technology project awards and additional project work at the Atlas mill tailings site near Moab, Utah. The income from operations for the first quarter of 2009 was $5.6 million, compared with $6.3 million in the year-ago quarter. Operating margin was 8.5% for the first quarter of 2009, against 14.2% in the year-ago quarter. The operating income and margin declined due to less revenues from the higher margin work performed at the Savannah River and Hanford sites. Additionally, operating margin decreased due to increased revenues from the lower margin Moab project and the consolidation of the joint venture, which resulted in huge revenues but only a slight increase in operating income.
Commercial Services
The Commercial Services revenues for the first quarter of 2009 were $21.7 million, compared with $30.6 million in the year-ago quarter. The income from operations for the first quarter of 2009 was $3.2 million, against $9.6 million in the year-ago quarter. The operating margin was 14.6% for the first quarter of 2009 against 31.5% in the year-ago quarter. The decline in revenues and operating margin was mainly due to the impact of the accelerated completion of two large, high-margin projects in the first quarter of 2008. The decrease in revenues was partly offset by increased revenues in commercial decommissioning and liquid waste processing services.
Logistics, Processing and Disposal
The Logistics, Processing and Disposal revenues for the first quarter of 2009 were $46.0 million, compared to $54.1 million in the year-ago quarter. The decrease in revenues was a result of declined volumes of waste processed and disposed of at Clive, Utah facility, primarily due to the completion of two large component projects during the first quarter of 2008. The decrease was partially offset by increased revenues at the company’s Bear Creek, Tennessee facility. Income from operations for the first quarter of 2009 was $11.8 million, compared with $16.9 million in the year-ago quarter. The operating margin was 25.6% for the first quarter of 2009, against 31.2% in the year-ago quarter, primarily due to lower revenues at our Clive facility.
Outlook for 2009
Looking ahead, we expect our Federal Services and International segments to continue to grow, said Steve Creamer, EnergySolutions chief executive officer. We continue to work with our commercial utility customers to identify funding solutions for license stewardship and large component projects which have been delayed due to reduced trust fund balances and tight credit market conditions.
At this time we are not changing our previous full year 2009 GAAP earnings guidance of $.50 – $.60 per share. However, due to the weakness in our Commercial business, we expect to be at the low end of our 2009 EBITDA guidance range. This assumes that we will see some positive impact from the additional funds from the stimulus package later this year.
Our capital structure is sound. We prepaid $10 million of debt in the first quarter of 2009 and we have over $90 million in cash and undrawn lending commitments from our banks. We have a strong core business and the resources we need to fund our growth.
