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ENERGYSOLUTIONS INC Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 9, 2012 02:26PM

ENERGYSOLUTIONS INC (ES) filed Quarterly Report for the period ended 2012-06-30. Energysolutions, Inc. has a market cap of $147.1 million; its shares were traded at around $1.65 with a P/E ratio of 1.4 and P/S ratio of 0.1.



Highlight of Business Operations:

Unrealized gains resulting from adjustments to the fair value of the NDT fund investments were $0.9 million and $6.3 million for the three month periods ended June 30, 2012, and 2011, respectively, and $6.9 million and $11.6 million for the six month periods ended June 30, 2012, and 2011, respectively. Net realized gains related to sales of investments, dividends and interest payments received from investments held by the NDT fund were $14.2 million and $12.3 million for the three month periods ended June 30, 2012 and 2011, respectively, and $27.7 million and $22.7 million for the six month periods ended June 30, 2012, and 2011, respectively. Both unrealized and realized gains and losses on the NDT fund investments are included in other income, net, in the condensed consolidated statements of operations and comprehensive income.

We recognized an income tax benefit of $3.4 million and income tax expense of $6.7 million for the six month periods ended June 30, 2012 and 2011, respectively, for a year-to-date effective rate of negative 238.9% and 39.3%, respectively, based on an estimated annual effective tax rate method. The negative effective tax rate results from the combination of an income tax benefit and pretax book income. The effective rate varies from the U.S. statutory rate of 35% primarily as a result of the amount of income tax benefit relative to pretax book income, lower tax on income in foreign jurisdictions and the NDT fund, the tax benefit of foreign research and development credits, income tax expense due to the change in management’s assertion with respect to unremitted foreign earnings, offset by foreign tax credits and further offset by the release of a domestic valuation allowance on net operating losses resulting from an increase in taxable income due to the partial change in the reinvestment assertion and the recognition of certain unrecognized tax benefits.

We recognized an income tax benefit of $3.4 million and income tax expense of $6.7 million for the six month periods ended June 30, 2012 and 2011, respectively, for a year-to-date effective rate of negative 238.9% and 39.3%, respectively, based on an estimated annual effective tax rate method. The negative effective tax rate results from the combination of an income tax benefit and pretax book income. The effective rate varies from the U.S. statutory rate of 35% primarily as a result of the amount of income tax benefit relative to pretax book income, lower tax on income in foreign jurisdictions and the NDT fund, the tax benefit of foreign research and development credits, income tax expense due to the change in management’s assertion with respect to unremitted foreign earnings, offset by foreign tax credits and further offset by the release of a domestic valuation allowance on net operating losses resulting from an increase in taxable income due to the partial change in the reinvestment assertion and the recognition of certain unrecognized tax benefits. During the six month period ended June 30, 2012, the Company recognized an income tax benefit of $1.1 million, due to the statue of limitations expiring by the taxing authorities in the jurisdictions in which we operate.

Our cash and cash equivalents decreased $5.9 million to $71.3 million during the six month period ended June 30, 2012, compared to a $6.6 million decrease in cash and cash equivalents during the six month period ended June 30, 2011. For the six month period ended June 30, 2012, cash used in operating activities was $2.0 million compared to cash provided by operating activities of $5.0 million for the six month period ended June 30, 2011. The decrease in cash flows from operating activities was due primarily to the timing of collections from customers, the use of advance payments from clients as projects advance and large payments made on vendor and subcontractor payables, employee incentive benefits and debt interest during the six month period ended June 30, 2012. We also reported a net income of $4.8 million for the six month period ended June 30, 2012, compared to a net income of $10.4 million for the six month period ended June 30, 2011. The decrease in cash flows from operating activities was partially offset by increases of $20.6 million resulting from the decrease in costs and estimated earnings in excess of billings on uncompleted contracts, decrease in receivables from the NDT fund and to the add back of significant non-cash expenses including depreciation, amortization and accretion expenses, amortization of debt financing fees and equity-based compensation expense.

We used $3.7 million of cash in investing activities during the six month period ended June 30, 2012, primarily to fund capital expenditures in the amount of $11.1 million related to the purchases of transportation equipment to support our disposal and logistics operations and for storage equipment to support waste disposal activities offset by proceeds of $5.2 million for the disposition of assets related to our Moab project which was completed in April 2012. Cash flow from investing activities was generated by sales of NDT fund investments of approximately $459.5 million of which $457.3 million was reinvested during the period. Investment income and realized earnings on the NDT fund are a source of working capital for the decommissioning work we perform at the Zion Station. We actively invest in securities to provide our target returns on the NDT trust assets to satisfy current and future decommissioning costs associated with the Zion Station ARO.

Read the The complete Report



Stocks Discussed: ES,
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