ENERGYSOLUTIONS CITES SWPF CONTRACT FOR MUCH OF Q1 WOES

EnergySolutions yesterday pointed at the Savannah River Salt Waste Processing Facility contract—where the company is a subcontractor to SWPF contractor Parsons—for much of the blame for its net loss of $0.7 million for the first quarter of 2012. Because of cost overruns on the project, and ongoing contract negotiations between Parsons and the Department of Energy, EnergySolutions had to retract its 2011 fees from the project—about $5.6 million—in the quarter, and could not report any earnings during 2012 to date. “As a minority partner in that project, we were first notified in April by the lead partner [Parsons] that they were running over budget on the construction of a separate plant now under construction, due to cost overruns by their tank fabricator subcontractor, who has since been replaced,” EnergySolutions President and CEO Val Christensen told investors during a conference call yesterday. “As a result, our ability to recognize those fees was also delayed until the lead partner concludes their negotiations with the Department of Energy.” EnergySolutions did not express much confidence that the situation would be resolved soon.  “The uncertainty we’re talking about is whether we will be able to recognize the salt waste fees in 2012 or 2013. If we had a high level of certainty that those fees would be recognizable in 2012 because the negotiations by our lead partner [Parsons] are successful, that wouldn’t have had an impact on guidance,” Christensen said. “We’re always conservative, and to the extent that we believe there’s a possibility that we won’t get this resolved and those fees will be recognized into 2013, we decided to bite the bullet now and recognize that in guidance.”