Earnings Labs

Centrus Energy Corp. (LEU)

Q2 2015 Earnings Call· Wed, Aug 26, 2015

$193.54

-5.86%

Key Takeaways · AI generated
AI summary not yet generated for this transcript. Generation in progress for older transcripts; check back soon, or browse the full transcript below.

Same-Day

+1.88%

1 Week

-4.57%

1 Month

-28.23%

vs S&P

-24.91%

Transcript

Operator

Operator

Greetings. And welcome to the Centrus Energy Corporation Investor Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Don Hatcher, Director of Risk Management. Thank you, sir. You may begin.

Don Hatcher

Analyst

Thank you. Good morning and thank you for joining us. Today’s call will cover the second quarter of 2015 that ended June 30th. Here today for the call are Dan Poneman, President and Chief Executive Officer; Steve Greene, Senior Vice President, Chief Financial Officer and Treasurer; and [John Dorian] [ph], Assistant Controller. Before turning the call over to Dan, I’d like to welcome all our callers, as well as those listening to our webcast. This conference call follows our earnings news release issued August 7th and our 10-Q filed the same date. All of our news releases and SEC filings including our 10-K, 10-Qs and 8-Ks are available on our website. A replay of this call also will be available later this morning on the Centrus website. I’d like to remind everyone that certain of the information that we may discuss on this call today maybe considered forward-looking information that involves risk and uncertainty, including assumptions about the future performance of Centrus. Our actual results may differ materially from those in our forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in our forward-looking statements is contained in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Finally, the forward-looking information provided today is time sensitive and is accurate only as of today August 26, 2015 unless otherwise noted. This call is the property of Centrus Energy. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Centrus is strictly prohibited. Thank you for your participation. And now, I will turn the call over to Dan Poneman.

Dan Poneman

Analyst

Thanks, Don. Good morning and thanks for joining us. As I said in my remarks to shareholders in May, we are strongly committed to better communication with our investors and that include doing regular investor calls to discuss our quarterly and annual results. Obviously, we hope to hold this call a couple of weeks ago when we release the 10-Q, but we ran into some scheduling conflicts regardless, we still felt it will be valuable to hold the call and answer any questions you might have. I am going to offer a short high level snapshot of where we have been, where we stand and where we are headed, and I will turn it over to our new Chief Financial Officer, Steve Greene, who will briefly comment on the results that were reported earlier in the 10-Q. Without question, the last few years have been difficult for our industry and for Centrus. As you know, the consequences of the Fukushima disaster have included a substantially depressed global market for nuclear field and the shutdown of the Paducah production facility in 2013 has changed the nature of the supply mix we used to meet the demands of our customers. The end of the 20-year Megaton to Megawatt deal has had a major impact on Centrus as the failure to obtain a loan guarantee to build the ACP. On a positive note, Kyushu Sendai 1 reactor restart in Japan has commenced and it is expected to resume commercial power generation by September. To be sure, there is still a long road to go but if nuclear generation continues to recover in Japan it will be good news not only for our industry, but more importantly for the people of Japan and for efforts to reduce carbon emissions. In spite of the challenges…

Steve Greene

Analyst

Thank you, Dan. Good morning, everyone. I am going to briefly summarize the results given that they have already been available for some time. Revenue for the second quarter was $63.3 million and $231.1 million for the six month period of 2015. The volume of SWU sales declined 63% and 46% in the three and six month periods of 2015 compared to 2014, reflecting the variability and timing of utility customer orders and the expected decline in SWU deliveries in 2015. The average price billed to customers for sales of SWU increased 9% in both the three and six month periods, reflecting the particular contracts under which SWU were sold during the period. Cost of sales declined in both the three and six month periods of 2015 compared to the same periods in 2014 due to lower SWU sales volume and charges in the prior year periods related to the wind down of the Paducah Gaseous Diffusion Plant. Gross profit increased $0.8 million in the three months period and $28.6 million in the six month period ending June 30, compared to the prior year periods and we achieved the gross profit margin of 4.8% for the six month period. Since May 2014, we have been performing the American Centrifuge research and development activities and cascade operations for Oak Ridge National Laboratory as a subcontractor to UT-Battelle. Revenue and costs related to this contract are reported above the gross profit line in the contract services segment. Substantially all of our ongoing American Centrifuge costs are supported by revenue from this agreement. Project costs outside of this agreement, including certain demobilization and maintenance costs, are reported below the gross profit line in advanced technology costs. The demobilization of American Centrifuge activities associated with the transition from the RD&D Agreement to the active…

Operator

Operator

Thank you. [Operator Instructions] It appears we have no questions at this time. I’d like to go back over to management for any additional concluding comments.

Dan Poneman

Analyst

No additional comments, again we’d like to thank everyone for your participation on the call and with that, we’ll conclude the call and have a nice day.

Steve Greene

Analyst

Thank you all.

Operator

Operator

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. We thank you for your participation and you may disconnect your lines at this time.