USEC CEO Discusses Q3 2010 Results - Earnings Call Transcript
USEC Inc. (
)
Q3 2010 Earnings Call
November 3, 2010 08:30 am ET
Executives
Steven Wingfield - Director of IR
John Welch - President & CEO
John Barpoulis - SVP& CFO
Analysts
Presentation
Operator
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USEC Inc. Q3 2009 Earnings Call Transcript
Greetings and welcome to the USEC Incorporated Third Quarter Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the prepared remarks. (Operator Instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce your host for today, Mr. Steven Wingfield, Director of Investor Relations for USEC. Thank you, sir you may now begin.
Steven Wingfield
Thank you for joining us for USEC’s conference call regarding the third quarter 2010 which ended September 30. With me today are John Welch, President, Chief Executive Officer; John Barpoulis, Senior Vice President, Chief Financial Officer; Phil Sewell, Senior Vice President; Bob Van Namen, Senior Vice President and Tracy Mey, Vice President, Chief Accounting Officer.
Before turning over the call to John Welch, I’d like to welcome all of our callers as well as those listening to our web cast. This conference call follows our earnings new release issued yesterday after the markets closed. That news release is available on many financial websites as well as our corporate website usec.com.
I want to inform all of our listeners that our news releases and SEC filings, including our 10-K, 10-Qs and 8-Ks are available on our website. We expect to file our quarterly report on Form 10-Q later today. A replay of this call also will be available later this morning on the USEC website.
I'd like to remind everyone that certain of the information that we may discuss on the call today may be considered forward-looking information that involves risk and uncertainty, including assumptions about the future performance of USEC. Our actual results may differ materially from those in our forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in our forward-looking statements is contained in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q.
Finally, the forward-looking information provided today is time sensitive and is accurate only as of today November 3, 2010. This call is the property of USEC. Any redistribution, re-transmission or rebroadcast of this call in any form without the expressed written consent of USEC is strictly prohibited. Thank you for your participation.
And now I'd like to turn the call over to John.
John Welch
Good morning and thank you for joining us to discuss our third quarter results. It was a busy quarter as we worked to provide the department of energy with the information, the Loan Guarantee office needed to evaluate our comprehensive update submitted in late July. Clearly that work was worth well, the Loan Guarantee office largely completed their initial technical review on October and provided us with a confidential draft term sheet that will serve as framework for our discussions going forward.
DOE’s decision to move forward reflects the significant progress of the past year on both the technical and financial fronts. I am pleased to report that we’d begun discussions with DOE on the next steps in the process. We see that as a positive development and we have pledged to do all that we can to expedite the process to a successful conclusion.
We see the events of the past two weeks as an important step forward in the process of securing a $2 billion Loan Guarantee for construction of the American Centrifuge plan. But I want to make it clear that we are not across the finish line. A great deal of work remains to be done before conditional commitment can be offered by DOE and more work beyond that to meet the conditions and finalize loan documents.
We must also raise additional capital beyond the $2 billion Loan Guarantee funding. Nonetheless, we are very pleased to receive the term sheet from the Loan Guarantee office and we look forward to concluding an agreement. With the Loan Guarantee, the ACP will help us meet the growing US Energy needs and provide a long-term reliable and secure fuel source for nuclear power plants both domestically and around the world.
Meeting that need, will give USEC investors an opportunity to earn an appropriate return on our capital. Leveraging the value of our substantial investment in the American Centrifuge technology has been a very key element of our plan to enhance long-term shareholder value. Over the past year, you’ve heard us report on our progress in addressing DOE’s concerns.
Since March, we’ve been operating Lead Cascade of AC100 centrifuges, our production ready machine. We have more than 0.5 million machine hours under our Lead Cascade testing program that began in August 2007. This experience gives us confidence in the performance of the AC100 and provides extensive operating data that supports our Loan Guarantee application.
Over the next several months we will be installing additional machines to accumulate more machine hours for the AC100 centrifuge machines. And while we have a solid machine in the AC100, we have continued development work in value engineering and our facilities in Oak Ridge, Tennessee. Our goal is to systematically work to increase the machine’s productivity and decrease its unit manufacturing cost.
We announced in late May that we had signed a definitive agreement with Babcock & Wilcox and Toshiba to make that $200 million investment in USEC. This investment will be made over three phases with each of those two companies making a $100 million investment. In early September, we closed the first phase of that investment of $75 million. This investment supports continued investment in ACP as we continue working through the loan guarantee process.
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