March 17, 2014

ENERGYSOLUTIONS CEO LAYS OUT PLANS FOR SMALLER, MORE LIMITED COMPANY

By ExchangeMonitor

New EnergySolutions CEO David Lockwood outlined plans for a scaled-down company that will focus on its most basic components—radioactive waste processing, transportation and disposal—in a call with investors yesterday. According to Lockwood, EnergySolutions will seek to sell off additional assets as it focuses on downsizing the company, paying off debt, and limiting the types of projects it pursues. “We’re in too many businesses in too many places. We’ll be more successful if we focus on fewer opportunities,” Lockwood said. “In order to focus our company, we will consider asset sales.” EnergySolutions has already announced it is looking to sell its European business unit, which includes the company’s contract to manage the UK’s Magnox nuclear power stations, but Lockwood declined to specify yesterday what other business segments may be up for sale. “We plan to use a significant portion of the proceeds from asset sales and cash flow from our businesses to decrease our outstanding debt obligations. … Our goal is to significantly reduce debt over time. I think that’s important to enable us to fund and grow our businesses,” he said.

EnergySolutions also intends to pursue a more limited structure to help cut costs, Lockwood said. “Today we have a cost structure more appropriate for a substantially larger firm,” he said. “We’ll be more successful if we’re able to deliver our products and services with a lower level of SG&A.” Yesterday, EnergySolutions reported mixed financial results for the second quarter of 2012, with revenues down and net income up. Revenues were down to $392.6 million for the second quarter of 2012, from $403.7 million in the same quarter of 2011. However, net income was up to $5.4 million in the second quarter, versus only $500,000 in the same time period last year. Lockwood pointed to that statistic as further evidence that front-end spending by EnergySolutions is an important part of his plan to restructure the company. “We haven’t adequately funded our businesses, and as a result, while margins are improving, revenues have fallen,” he said.

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