EnergySolutions, Inc (ES) Q2 2012 Earnings Call August 08, 2012 10:00 am ET Executives Richard Putnam David J. Lockwood - Chief Executive Officer, President and Director Gregory S. Wood - Chief Financial Officer and Executive Vice President Analysts Scott J. Levine - JP Morgan Chase & Co, Research Division Albert Leo Kaschalk - Wedbush Securities Inc., Research Division Yilma Abebe - JP Morgan Chase & Co, Research Division Robert Perry - Kingsland Capital Management, LLC George Walsh Gentry Klein Nathaniel Kirk Presentation Operator
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Any projections as to the company's future financial performance represents management's estimates as of today, August 8, 2012. EnergySolutions assumes no obligation to update these projections in the future due to changing conditions, developments or otherwise. We've also prepared a number of tables that will be referenced in our discussion this morning. These tables are part of the earnings release that was put out earlier this morning and can be accessed on the Investor Relations tab at www.energysolutions.com.To be respectful of your time, we will try to hold this call to 1 hour. We know that you will have a number of questions and we'll try to answer as many as possible in the hour. We'll be happy to follow up with you individually after the conference call if you have additional questions. With that, I'll now turn the call over to David Lockwood, CEO of EnergySolutions David J. Lockwood Good morning. It has been 58 days since Greg and I joined the management team at EnergySolutions. We have been extremely pleased with the performance of our management team and our dedicated employees. We are fortunate to work with the best people in the business, over 5,000 engineers, scientists and professionals who make a difference in the communities in which we work and live. Over the past 58 days we've spent time talking with our customers, our employees, regulators, competitors, consultants, others about our company and its various products and services. We've also had the opportunity to review the data concerning the prospects for the markets we serve. We've had the opportunity to evaluate where we're strong and where we could do better. Based on our analysis, we have reached 4 conclusions about our company. First, our company requires more focus. We are in too many businesses in too many places. We'll be more successful if we focus on fewer opportunities. In particular, we should focus our management and deploy our capital on businesses in which we have gained strategic competitive advantages and enjoy higher margins.
Second, our company requires a lower cost structure. Today, we have a cost structure that is more appropriate for a substantially larger firm. We'll be more successful if we're able to deliver our products and services at a lower level of SG&A.Third, our company requires a stronger balance sheet. We will be more successful if we're financially stronger, both in terms of winning customer contracts and funding and growing our businesses. And finally, our company requires more investment to grow. We have not adequately funded our businesses, and as a result, while margins are improving, revenues have fallen. We can grow our business, both organically and inorganically, but only if we are willing and able to provide capital to invest in those businesses. Based on these conclusions, we have developed 4 strategic initiatives. We plan to implement these initiatives by the end of this year. One, sell assets. In order to focus our company, we will consider asset sales. We made an announcement last month concerning discussions related to our U.K. business that owns the Magnox contract, and we are also considering other potential asset sales. Two, lower SG&A. We will lower the amount of expenses related to SG&A at our company. Three, reduce debt. We plan to use a significant portion of the proceeds from asset sales and cash flow from our businesses to decrease our expanding debt obligations. Four, grow our business. Through focusing on fewer businesses, selling assets, reducing our costs, and strengthening our balance sheet, we are planning to deploy our capital more aggressively in order to achieve significant revenue growth. Read the rest of this transcript for free on seekingalpha.com