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USEC Inc. Message Board

  • rjosmo rjosmo Jun 28, 2013 8:20 AM Flag

    Speculating vs investing in USU

    I welcome interested yet fact based comments:
    1 RS was anticipated and for known reason - discussion about restructure is speculative
    2 balance sheet handling of ACP was clearly explained and would be included in assets of USEC
    3 USEC has considerable backlog of contract business which without Paducah can be serviced out of inventory or Tenex either of which has minimal op cost or labor involved so better gross profit should be forecasted
    4 USEC has good relationship with key vendors (B&W and T) as seen by recent sale to T of storage bus.
    5 Top execs continue to hold stock so talk of BK is total BS trading manipulation attempt not factual
    6 Japan is in financial trouble and buying oil instead of restarting nukes has limited benefit.
    7 Business of USEC has EXTREME threshold of entry so ACP success which seems more likely than not will have substantial part of market to service and there is a national security element D.O.E. continues to support
    IMHO there is lots of trading volatility but longer term this company has great chance of returning to its utility status with a dividend without old factories as albatross. Suggest accumulating not running.
    IMHO

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • If you're investing in USU at this point you really are stupid. SHORT IT!! I predict 1 for 25 reverse stock split and then stock price eventually goes back under $1 and then bankruptcy within 2-3 years IMHO.

      Sentiment: Strong Sell

    • Read the next two comments in reverse. It was too long to put in one comment and Yahoo puts the first comment at the bottom instead of the top.

    • NET INCOME AFTER THE ADJUSTMENTS IF THE AMERICAN CENTRIFUGE TECHNOLOGY WERE USED INSTEAD OF GASEOUS DIFFUSION TECHNOLOGY:
      2007: 96.6+510.2 = 606.8
      2008: 48.7 + 392.9 = 441.6
      2009: 58.5 + 582.3 = 640.8
      2010: 7.5 + 574.9 = 582.4
      2011: (540.7) + 474.6 = (66.1)

      AVERAGE SHARES OUTSTANDING:
      2007: 93.0
      2008: 110.6
      2009: 111.4
      2010: 112.8
      2011: 120.8

      ADJUSTED EPS:
      2007: 606.8/93 = 6.52
      2008: 441.6/110.6 = 3.99
      2009: 640.8/111.4 = 5.75
      2010: 582.4/112.8 = 5.16
      2011: (66.1)/120.8 = (.55)

      ACTUAL EPS THAT OCCURRED WITH THE GASEOUS DIFFUSION TECHNOLOGY (ACCORDING TO ANNUAL REPORTS)
      2007: 1.04
      2008: .44
      2009: .53
      2010: .07
      2011: -4.48

      INCREASE IN EPS IF THE AMERICAN CENTRIFUGE TECHNOLOGY WAS USED INSTEAD OF THE GASEOUS DIFFUSION TECHNOLOGY
      2007: (6.52-1.04)/1.04 = 527%
      2008: (3.99-.44)/.44 = 807%
      2009: (5.75-.53)/.53 = 985%
      2010: (5.16-.07)/.07 = 7271%
      2011: NA

      This estimate has a lot of weaknesses though. I'm pretty sure amortization would be significantly higher with the American centrifuge technology. The cost of sales of SWU and uranium includes the cost of uranium sold, which would not be affected by which technology is used. Each year they would pay off some of the financing, so interest expense would decline each year. USEC says the American centrifuge technology requires less labor, but they don't give enough details to calculate the savings, so I have to neglect that. Interest would be capitalized and amortized, not expensed each year. Income for corporate tax purposes is calculated differently than the Generally Accepted Accounting Principles calculation of income we see on financial statements. Even with a significant margin of error though, these numbers seem to give us a lot of leeway. Anyone agree or disagree?

      • 1 Reply to canuck7474
      • The problem is that ACP will not be fully operating until its completion, so its impact is staged over time....and ACP is not even running as of yet. Shoot, USU does not even have the loan guarantee of 2b or the additional funding necessary. Plus, the additional funding necessary will be much more than 1b, so the premise that interest expense will be only on 3b is likely not correct unless the other money comes from investors as opposed to note holders.

        It will be some time in 2014 before ACP loan approval will even come, if at all. Then, it will take several years to complete the plant. Three more years minimum, but maybe four or five. That means you are looking at maybe 2019 before you have full benefit of ACP plant.

        Equity is a LONG way off from reaping the benefits of an ACP plant for USU. What do you think is going to happen to shareholders in the meantime? Oh wait, it is already happening.

    • The following is a fact-based approximation of what the results would have been from 2007 - 2011 if the American centrifuge technology was used for all uranium enrichment instead of the gaseous diffusion technology:

      According to USEC's annual report, electric power is 70% of the cost of production at their existing gaseous diffusion technology. The American centrifuge technology requires ~95% less energy per SWU.
      In $Millions:
      ACTUAL COST OF SALES OF SWU AND URANIUM USING GASEOUS DIFFUSION TECHNOLOGY (FROM USEC'S ANNUAL REPORTS)
      2007: 1473.6
      2008: 1202.2
      2009: 1640.3
      2010: 1623.2
      2011: 1391.1

      ENERGY THAT WOULD'VE BEEN SAVED IF THEY USED THE AMERICAN CENTRIFUGE TECHNOLOGY INSTEAD OF GASEOUS DIFFUSION TECHNOLOGY
      2007: 1473.6*70%*95% = 979.9
      2008: 1202.2*70%*95% = 799.5
      2009: 1640.3*70%*95% = 1090.8
      2010: 1623.2*70%*95% = 1079.4
      2011: 1391.1*70%*95% = 925.1

      INTEREST COST FOR AN ADDITIONAL $3 BILLION FINANCING (ASSUMING A FINANCING RATE OF 2.0% LIBOR RATE PLUS 4.5% MARGIN IN ACCORDANCE WITH PAGE 110 OF THEIR ANNUAL REPORT)
      2007: 3000*6.5% = 195
      2008: 3000*6.5% = 195
      2009: 3000*6.5% = 195
      2010: 3000*6.5% = 195
      2011: 3000*6.5% = 195

      MARGINAL CHANGE IN INCOME BEFORE INCOME TAX:
      2007: 979.9 - 195 = 784.9
      2008: 799.5 - 195 = 604.5
      2009: 1090.8 - 195 = 895.8
      2010: 1079.4 - 195 = 884.4
      2011: 925.1 - 195 = 730.1

      MARGINAL CORPORATE INCOME TAX (35%)
      2007: 784.9*35% = 274.7
      2008: 604.5*35% = 211.6
      2009: 895.8*35% = 313.5
      2010: 884.4*35% = 309.5
      2011: 730.1*35% = 255.5

      MARGINAL ADDITION TO NET INCOME
      2007: 784.9 - 274.7 = 510.2
      2008: 604.5 - 211.6 = 392.9
      2009: 895.8 - 313.5 = 582.3
      2010: 884.4 - 309.5 = 574.9
      2011: 730.1 - 255.5 = 474.6

      PREEXISTING NET INCOME (ACCORDING TO ANNUAL REPORTS)
      2007: 96.6
      2008: 48.7
      2009: 58.5
      2010: 7.5
      2011: (540.7)

 

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