DRTK Duratek (MM)

Duratek, Inc. (NASDAQ:DRTK) today reported net income of $2.8 million, or $0.18 per diluted share, for the three-month period ended September 30, 2005, as compared to net income of $9.3 million, or $0.63 per diluted share, for the comparable period in 2004. Revenues were $67.1 million for the three months ended September 30, 2005 compared to $77.4 million in the same period in 2004. The decrease in net income was primarily the result of losses incurred on two Federal Services contracts, lower margins realized in Commercial Services and Commercial Processing related to product mix changes, and lower revenues in Commercial Services due largely to the lower than anticipated level of new Commercial work required to offset projects completed during the year. In addition, a number of items favorably impacted the prior year third quarter net income such as higher incentive fees and equitable adjustments on certain Federal Services contracts, as well as additional revenues realized on the early termination of a Commercial Services fixed price contract. The decrease in revenues of $10.3 million for the quarter was primarily due to lower revenues generated by the Commercial Services and Federal Services businesses. For the nine month period ended September 30, 2005, net income was $13.0 million, or $0.85 per diluted share, as compared to net income of $18.0 million, or $1.23 per diluted share, for the comparable period in 2004. Revenues were $212.7 million for the nine months ended September 30, 2005 compared to revenues of $215.1 million for the same period in 2004. The decrease in the year-to-date net income of $5.0 million was due to the items discussed previously. The decrease in year-to-date revenues of $2.4 million was due primarily to lower revenues generated by the Commercial Services business segment offset partially by higher revenues from Federal Services. Robert E. Prince, President and CEO said, "Over the past four years we have realized continuous improvement of our financial results and achieved relatively consistent results when viewed on an annual basis. During this same period we have been positioning the company for improving markets for our services. Large upcoming projects supporting the Department of Energy cleanup, emerging international markets, and broadening of services we can provide to domestic commercial nuclear licensees all should present us with attractive long-term growth opportunities. Unfortunately, the timing for capturing these new federal and commercial opportunities is difficult to predict, contributing to the lower performance achieved during the third quarter and expected for the full year." Robert F. Shawver, Executive Vice President and CFO added, "Some major swing items explain the contrast between the record third quarter of 2004 results and this year's performance. The combination of a number of items that significantly added to last year's income, the current quarter losses incurred on two of our Federal Services projects, as well as the lower revenues overall account for most of the decrease in income. We continue to work on recovering claims on the contracts that experienced the losses as well as adding new business to increase revenues in higher margin areas." A conference call will be held today at 10:00 a.m. Eastern Time. Investors can listen to the conference call by logging into www.duratekinc.com or by calling 1-800-857-4830, pass code Duratek. In addition to the web cast and teleconference, the Company will be placing a presentation of the data on its website under investor relations financial report section. We encourage investors to listen to the call in addition to viewing the presentation. A replay of the call will be available at approximately 1:00 p.m. today through November 17, 2005 by dialing 1-866-415-3313. The web cast will be archived on the Duratek website for at least 30 days. Consolidated balance sheet, statement of operations, and statement of cash flows are attached. Duratek provides safe, secure radioactive materials disposition and nuclear facility operations for commercial and government customers. Certain statements contained in this press release may constitute "forward-looking statements" within the meaning of Section 21E(i)(1) of the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Duratek's actual results to be materially different from any future results expressed or implied by these statements. Such factors include the following: the Company's ability to manage its commercial waste processing operations, the timing and award of contracts by the U.S. Department of Energy for the cleanup of waste sites administered by it; the acceptance and implementation of the Company's waste treatment technologies in the government and commercial sectors; and other large technical support services projects; the Company's ability to successfully add revenues from new contracts; and the timing of completing existing contracts. All forward-looking statements are also expressly qualified in their entirety by the cautionary statements included in the Company's SEC filings, including its quarterly reports on Form 10-Q and its annual report on Form 10-K. -0- *T DURATEK, INC. AND SUBSIDIARIES Consolidated Balance Sheets (in thousands of dollars, except per share amounts) September 30, December 31, 2005 2004 ------------- ------------- Assets (unaudited) (1) Current assets: Cash and cash equivalents $ 19 $ 23,296 Accounts receivable, net of allowance for doubtful accounts of $100 in 2005 and $158 in 2004 44,428 30,997 Cost and estimated earnings in excess of billings on uncompleted contracts 18,906 16,715 Prepaid expenses and other current assets 9,669 13,708 ------------- ------------- Total current assets 73,022 84,716 Retainage 526 1,257 Property, plant and equipment, net 63,761 66,151 Goodwill 72,129 72,129 Other intangible assets 2,953 3,747 Decontamination and decommissioning trust fund 19,375 19,050 Other assets 31,494 21,487 ------------- ------------- Total assets $ 263,260 $ 268,537 ============= ============= Liabilities and Stockholders' Equity Current liabilities: Short-term borrowings $ 1,750 $ - Current portion of long-term debt 859 858 Accounts payable 6,675 15,643 Due to State of South Carolina 3,743 6,073 Accrued expenses and other current liabilities 20,304 24,646 Unearned revenues 9,510 14,694 Waste processing and disposal liabilities 5,005 6,980 ------------- ------------- Total current liabilities 47,846 68,894 Long-term debt, less current portion 83,497 84,142 Facility and equipment decontamination and decommissioning liabilities 41,478 40,419 Other noncurrent liabilities 7,541 6,756 ------------- ------------- Total liabilities 180,362 200,211 ------------- ------------- Stockholders' equity: Preferred stock - $0.01 par value; authorized 4,740,000 shares; none issued - - Series B junior participating preferred stock, $0.01 par value; 100,000 shares authorized; none issued - - Common stock - $0.01 par value; authorized 35,000,000 shares; issued 16,463,407 shares at September 30, 2005 and 16,236,781 shares at December 31, 2004 165 162 Capital in excess of par value 88,379 86,784 Deferred compensation employee stock trust 1,323 1,323 Retained earnings (accumulated deficit) 3,931 (9,043) Treasury stock at cost, 1,770,306 shares at September 30, 2005 and December 31, 2004 (10,900) (10,900) ------------- ------------- Total stockholders' equity 82,898 68,326 ------------- ------------- Total liabilities and stockholders' equity $ 263,260 $ 268,537 ============= ============= (1) The Consolidated Balance Sheet as of December 31, 2004 has been derived from our audited Consolidated Balance Sheet included in our Annual Report on Form 10-K for the year ended December 31, 2004. DURATEK, INC. AND SUBSIDIARIES Consolidated Statements of Operations (in thousands, except per share amounts) Three months ended Nine months ended ----------------------- ----------------------- September September September September 30, 2005 26, 2004 30, 2005 26, 2004 ----------- ----------- ----------- ----------- (unaudited) (unaudited) Revenues $ 67,113 $ 77,403 $ 212,683 $ 215,140 Cost of revenues 52,706 52,561 162,442 156,659 ----------- ----------- ----------- ----------- Gross profit 14,407 24,842 50,241 58,481 Selling, general and administrative expenses 8,405 8,006 24,702 24,045 ----------- ----------- ----------- ----------- Income from operations 6,002 16,836 25,539 34,436 Interest expense (1,624) (1,741) (4,768) (5,295) Other income, net 13 129 54 261 ----------- ----------- ----------- ----------- Income before income taxes and equity in income of joint ventures 4,391 15,224 20,825 29,402 Income taxes 1,690 5,941 8,030 11,467 ----------- ----------- ----------- ----------- Income before equity in income of joint ventures 2,701 9,283 12,795 17,935 Equity in income of joint ventures 119 27 179 106 ----------- ----------- ----------- ----------- Net income 2,820 9,310 12,974 18,041 Preferred stock dividends - - - (60) ----------- ----------- ----------- ----------- Net income attributable to common stockholders $ 2,820 $ 9,310 $ 12,974 $ 17,981 =========== =========== =========== =========== Weighted average common stock outstanding: Basic 14,838 14,301 14,749 14,099 =========== =========== =========== =========== Diluted 15,344 14,844 15,294 14,659 =========== =========== =========== =========== Income per share: Basic $ 0.19 $ 0.65 $ 0.88 $ 1.28 =========== =========== =========== =========== Diluted $ 0.18 $ 0.63 $ 0.85 $ 1.23 =========== =========== =========== =========== DURATEK, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands of dollars) Nine months ended ---------------------------- September 30, September 26, 2005 2004 ------------- ------------- (Unaudited) Cash flows from operating activities: Net income $ 12,974 $ 18,041 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 7,910 8,036 Stock compensation expense 74 85 Equity in income of joint ventures, net of distributions (360) 86 Changes in operating assets and liabilities: Accounts receivable, net (13,442) 2,215 Costs and estimated earnings in excess of billings on uncompleted contracts (10,102) (9,739) Prepaid expenses and other current assets 1,632 1,547 Accounts payable and accrued expenses and other current liabilities (13,554) (7,652) Due to State of South Carolina (2,330) (8,869) Unearned revenues (5,184) (7,161) Waste processing and disposal liabilities (1,975) 4 Facility and equipment decontamination and decommissioning liabilities 734 673 Retainage 2,707 282 Other (1,216) (1,074) ------------- ------------- Net cash used in operating activities (22,132) (3,526) ------------- ------------- Cash flows from investing activities: Additions to property, plant and equipment (3,191) (3,605) Other (61) (205) ------------- ------------- Net cash used in investing activities (3,252) (3,810) ------------- ------------- Cash flows from financing activities: Proceeds from borrowings under revolving credit facility 1,750 - Proceeds from issuance of common stock 1,524 3,099 Repayments of long-term debt (644) (25,000) Deferred financing costs paid (127) (27) Repayments of capital lease obligations (396) (220) Preferred stock dividends paid - (114) ------------- ------------- Net cash provided by (used in) financing activities 2,107 (22,262) ------------- ------------- Net decrease in cash (23,277) (29,598) Cash, beginning of period 23,296 35,174 ------------- ------------- Cash, end of period $ 19 $ 5,576 ============= ============= Supplemental disclosure of non-cash financing activities: During the nine months ended September 30, 2005, we entered into $1,068 in capital lease agreements to finance the purchase of machinery and computer equipment. During the nine months ended September 26, 2004, we entered into $174 in capital lease agreements to finance the purchase of machinery and equipment. *T