Centrus Energy Corp. (NYSE MKT:LEU) Q2 2018 Earnings Conference Call - Final Transcript

Aug 09, 2018 • 08:30 am ET


Centrus Energy Corp. (NYSE MKT:LEU) Q2 2018 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the Centrus Energy Corporation's Second Quarter 2018 Quarterly Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Don Hatcher, Director of Investor Relations. Thank you, Mr. Hatcher. You may begin.

Don Hatcher

Thank you, Devon. Good morning, and thank you for joining. Today's call will cover the results for the second quarter of 2018 that ended June 30. Here today for the call are Dan Poneman, President and Chief Executive Officer; Marian Davis, Senior Vice President, Chief Financial Officer and Treasurer; and John Dorrian, Controller and Chief Accounting Officer.

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 yesterday afternoon. We expect to file our quarterly report on Form 10-Q this afternoon. 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 will also be available later this morning on the Centrus website.

(Forward-looking Cautionary Statements) This call is the property of Centrus Energy. Any transcription, redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Centrus is strictly prohibited. Thank you for your participation.

And now I'll turn the call over to Dan Poneman.

Dan Poneman

Thank you, Don, and thank you to everyone listening today. This has been a tough period for the nuclear industry and that is reflected in our quarterly results. That having been said, we've made progress in a number of important areas in ways that will bear fruit in the future in support of our efforts to grow and expand our business.

We generated $39.4 million in revenues this quarter and are on track to meet our annual guidance for revenues and end of year cash balance. We are reiterating that guidance today. We expect nearly half of our 2018 revenues in the fourth quarter.

As we've discussed on prior calls, our order book consists almost entirely of long-term contracts with deliveries in multiple years. Some of those contracts were signed several years ago when prices were considerably higher, while other contracts reflect business we have won more recently. Because the deliveries we made during the second quarter came disproportionately from newer, lower-priced contracts, we posted a gross loss for the quarter.

It's also important to note that lower market prices also drive down the cost of obtaining our supply. Because cost of sales per unit are calculated based on a rolling average of our diverse mix of primary and secondary suppliers, that reduction in supply cost does not show up in our bottom line right away. But beginning in 2019 and over the next few years, we expect to realize reductions in our supply costs.

While the overall nuclear fuel market is still oversupplied and facing significant pressure here in the U.S. and abroad, our sales team has been working