USEC endures rough quarter

By Frank Lewis

November 7, 2013

Frank Lewis

PDT Staff Writer

American Centrifuge RD&D program remains under budget and on schedule while meeting milestones. The Department of Energy is continuing support in increments, yet USEC reports a net loss for the quarter. On Tuesday, USEC reported a net loss of $44.3 million or $9.04 per basic and diluted share for the quarter ended Sept. 30, compared to net income of $4.5 million or 92 cents per basic and diluted share for the third quarter of 2012. For the nine-month period ended Sept. 30, the net loss reported was $87.2 million or $17.79 per basic and diluted share.

Third quarter 2013 results also include the recognition of $35.9 million of other income primarily from DOE pro-rata cost sharing support for the research, development and demonstration (RD&D) program, offset by increased advanced technology costs.

According to a report filed by USEC, Inc., “We continue to make progress in demonstrating the American Centrifuge technology in 2013. We completed construction of our American Centrifuge commercial demonstration cascade in Piketon, Ohio, during the spring, then shifted construction activities to preparing the facility for machine installation and installing new infrastructure systems. In the subsequent months we completed formal integrated systems testing of plant infrastructure and control systems. We next conditioned the plant equipment and the 120 centrifuge machines with uranium gas before beginning demonstration of full cascade operations in early October. The 120-machine cascade is the centerpiece of the RD&D program with DOE. The objectives of the RD&D program are to demonstrate the American Centrifuge technology through the construction and operation of a commercial demonstration cascade and sustain the domestic U.S. centrifuge technical and industrial base for national security purposes and potential commercialization of the American Centrifuge technology. This includes activities to reduce the technical risks and improve the future prospects of deployment of the American Centrifuge technology.”

The financial results for the third quarter and the nine-month period of 2013 reflect a reduction in separative work unit (SWU) revenue and lower gross profit primarily due to non-production costs related to the transition of the Paducah Gaseous Diffusion Plant (GDP) compared to the same periods of 2012. On May 24, 2013, USEC announced that they were not able to conclude a deal for the short-term extension of uranium enrichment at the Paducah GDP and ceased uranium enrichment at the end of May 2013. USEC officials said they are working on the transition of the Paducah GDP, including preparing facilities for return to the U.S. Department of Energy (DOE) following the ceasing of enrichment in the second quarter of 2013.

“Although we reported a net loss and a negative gross profit margin, this was largely due to the significant amount of non-production expenses related to the transition of the Paducah GDP,” John K. Welch, USEC president and chief executive officer, said. “Without those substantial expenses, we would have reported a gross profit for the quarter and year to date.”

Frank Lewis may be reached at 740-353-3101, ext. 252, or at flewis@civitasmedia.com. For breaking news, follow Frank on Twitter @FrankLewisPDT.