Kenneth Fletcher
RW Monitor
11/14/2014
The reorganization of USEC into Centrus Energy has been a boost for the company, with Centrus reporting this week a net income of about $419 million for the third quarter of 2014 compared to a net loss of $44.3 million the same quarter last year. The company’s costs have dropped as a result of the transition of the Paducah Gaseous Diffusion Plant back to the Department of Energy and the transition of management of the American Centrifuge program to Oak Ridge National Laboratory. But the increased income reported is primarily a result of reorganization gains. “We are pleased to have successfully concluded the Chapter 11 process at the end of the third quarter and have sharpened our focus on improving the prospects for our business going forward,” Centrus Interim President John Castellano said in a statement. “The results reported for the third quarter include a number of adjustments that are part of strengthening our balance sheet.”
USEC filed for Chapter 11 bankruptcy in March in an effort to replace $530 million in debt that would have largely come due in October. At the end of September, USEC became Centrus Energy and its debt and preferred stock were replaced by $240.4 million in debt and new common stock. Creditors received $200 million in new debt and 79 percent in common stock, while preferred investors Toshiba and B&W each received $20.19 million of the new debt and about 8 percent of the new common stock. “For the third quarter, reorganization items, net, were $440.0 million, a result of the Company’s emergence from bankruptcy,” Centrus said in a release this week.
Also in October Centrus completed turnover of the Paducah Gaseous Diffusion Plant to DOE. The company ceased operations at the plant in 2013, but still held the lease and numerous associated expenses for holding the plant. “A major focus of our employees over the past 15 months has been preparing the Paducah plant for return to the Department of Energy. This effort was largely concluded in October, and the non-production expenses related to Paducah should have a diminishing effect on our cost of sales in the future,” Castellano said.
Sales Revenue Declines
Revenue for the latest quarter stood at $120.7 million, a sharp decrease of $207.7 million compared to the same period in 2013. “The lower cost of sales in 2014 was due to lower SWU sales volume and lower non-production expenses,” according to a Centrus release. “Non-production expenses are included in cost of sales during both 2013 and 2014 periods, but non-production expense declined 63 percent in the third quarter of 2014 and 46 percent in the nine-month period of 2014 compared to the corresponding periods of 2013 as Paducah activities wound down.”
American Centrifuge Costs Cut Sharply
Costs for advance technology for the American Centrifuge program totaled $5.3 million in the latest quarter, a significant drop of $39.2 million when compared to the same period in 2013. That is a result in a reduction in work scope for the company, as DOE took over management of the program in May and Centrus is now performing work under a subcontract to Oak Ridge National Laboratory to maintain existing centrifuges. In 2013, the company was still focused on building an operating cascade of centrifuges under a cost-share program with DOE.
