The growing market for decommissioning of commercial nuclear reactors could help offset revenue losses in other business lines at engineering and infrastructure giant AECOM, such as construction of gas-fired power plants, the company’s top executive said Tuesday.
Like rival Fluor, AECOM is moving out of the market to build fixed-price natural gas power plants. When asked during the company’s quarterly earnings call what this might mean for the company, Chairman and CEO Michael Burke said AECOM could shift resources to other areas that offer stronger returns and opportunities.
“For instance, the nuclear decommissioning space, we won the first big project here in the U.S. for the San Onofre decommissioning,” he said. “We’re focused on Diablo Canyon, which will be the next big decommissioning in the U.S. Bruce Power has a number of decommissioning activities in Canada. So, we see that as a $200 billion opportunity.”
The San Onofre Nuclear Generating Station (SONGS) in San Diego County, Calif., never restarted after it suspended power production in 2012 due to faulty steam generators. A partnership of AECOM and EnergySolutions has a 10-year, $1 billion decommissioning contract for the facility.
The partnership, under the name SONGS Decommissioning Solutions, has already taken over management of 21 systems at the plant, including safety, engineering, and radiation protection and control. That completed the first phase of the anticipated $4.4 billion decommissioning. A state coastal development permit, required for major decontamination and decommissioning to begin, is expected early next year. The majority of cleanup is due to be complete by 2028.
The two-reactor Diablo Canyon nuclear complex in San Luis Obispo County is the last nuclear power station operating in California. Owner Pacific Gas & Electric announced two years ago Diablo Canyon would retire in the mid-2020s rather than seeking a license extension from the Nuclear Regulatory Commission. The utility is still developing its decommissioning plan for the plant.
Quarterly Numbers
AECOM reported $4.8 billion in quarterly revenue, up 8.2 percent from the $4.4 billion during the first three months of 2017. After the cost of revenue was subtracted, AECOM listed gross profit of $141 million for the first three months of 2018, its second quarter of fiscal 2018. That is down from $168 million year over year.
Net loss and diluted loss per share came in $120 million and $0.75 for the latest quarter, compared to a net loss of $102 million and $0.66 one year ago. The latest figures were affected by the non-cash charge on non-core oil and gas assets held for sale.
AECOM’s Construction Services division, which includes energy projects and nuclear reactor decommissioning in North America, reported quarterly revenue of $1.9 billion, up from $1.7 billion a year ago. The unit’s operating loss increased from $26 million to $180 million on a year-over-year basis, AECOM said, citing a $168 million non-cash charge over certain oil and gas assets being held for sale.
Management reported increased quarterly revenue for the business branch that counts the Department of Energy among its government customers. The company realized about $898 million in revenue from its Management Services segment, up from $827 million from the same period in 2017. The sector’s operating income dropped to $43 million from $52 million.
AECOM reported a record company-wide backlog of about $50 billion, up 18 percent from $42 billion a year ago. Its adjusted earnings per share guidance for its fiscal year remains unchanged at $2.50-$2.90.
