Kenneth Fletcher
RW Monitor
5/8/2015
Centrus Energy Corp. President and CEO Dan Poneman laid out a vision this week for the comeback of the uranium enrichment firm, emphasizing the need to be commercially successful in addition to fulfilling national security needs. Centrus, formerly known as USEC, has struggled to turn a profit in recent years. The company’s American Centrifuge technology has received substantial funding from the Department of Energy, though, which has cited the need to maintain a domestic enrichment supply for national security needs such as tritium production. “We still face a national security imperative to remain in the enrichment business,” Poneman said this week at the company’s annual shareholder meeting. “It therefore becomes the mission of Centrus to establish itself as a successful commercial enterprise, standing on its own two feet so that the company can continue to serve the vital missions that are inherent to the unique role and responsibilities of the United States. The stronger our commercial business, the better able we are to support the nation’s business.”
Poneman, the former Deputy Secretary of the Department of Energy, took over in March at a time of transition for Centrus. The company wrapped up a Chapter 11 bankruptcy financial restructuring last fall after failing to commercialize American Centrifuge due, in part, to the uranium market turndown following the 2011 Fukushima accident. It also ended all of its own enrichment operations last year upon completing the return of the Paducah Gaseous Diffusion Plant to DOE. The firm’s main source of revenue currently is brokering Russian low enriched uranium through a supply agreement with Tenex.
Centrus hopes to eventually commercialize American Centrifuge, but has acknowledged the market doesn’t support it right now. The firm is currently maintaining the American Centrifuge technology for DOE under a subcontract with Oak Ridge National Laboratory, and has suggested in the past that DOE could support a new enrichment plant for national security needs before it becomes commercially viable.
Poneman Embarks on ‘Listening Tour’
Upon taking over as head of Centrus, Poneman said he embarked on a two-month “listening tour” of the company’s customers and suppliers and has since defined several areas of focus for the company. The first involves growing the company’s enriched uranium business, “giving it fresh focus, strong leadership and a reinvigorated customer first philosophy,” he said. But the company would also seek to “supplement its existing capabilities” through partnerships and other actions. “We will also explore additional business opportunities that leverage our nuclear and manufacturing capabilities even as the enrichment market remains depressed,” he said.
Despite the current depressed market, Centrus will continue to work toward “adding new enrichment capacity,” Poneman said. He also cited the “crucial role” the company plays in national security and global nuclear security missions. “That said, Centrus will size its business and its plans to the commercial marketplace with a long-term focus on the deployment of new production,” he said, adding later, “We believe that by listening to our customers, by working with our partners, investors, shareholders and other stakeholders and pursuing the highest levels of performance and execution and ethics and integrity, we can and we will succeed.”
‘Leading this Company was Dan’s Destiny’
Poneman’s familiarity with the nuclear industry made him a top choice to lead the company, Mikel Williams, Chairman of Centrus’ Board of Directors, said at the meeting. “He has decades of experience in our industry and in solving the types of challenges that Centrus faces. He knows what keeps our customers up at night, he has a good plan for how we can provide them clean, reliable electricity through nuclear power plants for years to come,” Williams said. “He knows the issues facing the fuel cycle, he has written and spoken about them in depth, and he’s very passionate about the importance of maintaining a U.S. capability to enrich uranium for energy and national security purposes. As I learned more about him during our recruiting process, I came to realize that leading this company was Dan’s destiny.”
Centrus Reports $15.4 Million Net Loss in 2015’s First Quarter
Also this week, Centrus reported a net loss of $15.4 million in the first quarter of 2015, an improvement over the $50.8 million net loss it experienced in the first quarter last year. The company reported gross profits of $6.9 million in the period, a $27.8 million increase when compared to the same period in 2014. That is partly a result of lower costs after the end of the Paducah turnover. “We are focused on strengthening our core business of selling low enriched uranium to our utility customers as we complete the final phase of transition from our legacy operations at Paducah,” Poneman said in a statement. “Our results this quarter reflect these changes with an increase in gross profit for the quarter as compared with the first quarter of 2014 and a solid cash balance.”
In 2015, Centrus plans to “deliver significantly less SWU to customers than the approximately 8 million SWU delivered in 2013,”according to the company’s earnings statement. “During 2014, we delivered approximately 3 million SWU, and we expect to deliver approximately 2 million SWU in 2015. We will also continue to execute our contract with ORNL to conduct research, development and demonstration of the American Centrifuge technology under the terms of the ACTDO Agreement.”
