SASKATOON, SASKATCHEWAN--(Marketwired - April 28, 2017) -
ALL AMOUNTS ARE STATED IN CDN $ (UNLESS NOTED)
Cameco (TSX:CCO)(NYSE:CCJ) today reported its consolidated financial and operating results for the first quarter ended March 31, 2017 in accordance with International Financial Reporting Standards (IFRS).
"There were several first-quarter developments that generated both positive and negative sentiment in our market," said president and CEO, Tim Gitzel. "However, on balance, our cautious optimism remains unchanged and in the near term, we will continue to evaluate all of our supply sources in light of an unsustainably weak price environment."
"As we expected, our first quarter sales were light, resulting in the usual seasonality of our cash flow. However, our strategic focus on costs and efficiency is beginning to pay off, with administration and production costs coming down significantly compared to last year. Our 2017 sales remain on track, at an average realized price that is well above the current market, a market that remains uncertain and oversupplied. We're managing through the uncertainty, but even low-cost operations like ours, face pressure. Once the uncertainty clears and uranium demand picks up, we expect prices will move significantly higher, and we will be in the enviable position of being able to respond with expanded capacity at our low-cost, world-class assets. With Japan continuing down its path to restarting reactors, and with construction of new nuclear plants fueling increasing future uranium requirements, we believe our focus on value and on our tier-one assets will allow us to maintain our competitive position, and thrive in a rising market."
Summary of first quarter results and developments:
- Net losses of $18 million; adjusted net losses of $29 million: Severance costs related to strategic changes, the TEPCO contract termination, continued market and price weakness, and strengthening of the Canadian dollar impacted our first quarter results in 2017 compared to 2016.
- Maintaining annual guidance: Our 2017 financial outlook and production expectations remained unchanged after the first quarter.
- Average realized price weighted to fourth quarter: In the second and third quarters, we expect the pricing on deliveries in our uranium segment to yield results similar to the first quarter, with a higher average realized price expected on deliveries in the fourth quarter; our expected 2017 annual average realized price remains unchanged at $49.00 per pound.
- Strategic focus starting to positively impact results: Our results reflect significant decreases in direct administration costs and cash production costs compared to last year; we continue to focus on lowering our costs and improving efficiency.
HIGHLIGHTS |
THREE MONTHS ENDED MARCH 31 |
||
| ($ MILLIONS EXCEPT WHERE INDICATED) | 2017 | 2016 | |
| Revenue | 393 | 408 | |
| Gross profit | 55 | 118 | |
| Net earnings (losses) attributable to equity holders | (18) | 78 | |
| $ per common share (basic) | (0.05) | 0.20 | |
| $ per common share (diluted) | (0.05) | 0.20 | |
| Adjusted net losses (non-IFRS, see page 2) | (29) | (7) | |
| $ per common share (adjusted and diluted) | (0.07) | (0.02) | |
| Cash used in operations (after working capital changes) | (8) | (277) | |
The 2016 first quarter and 2017 first quarter financial information presented is unaudited.
NET EARNINGS
The following table shows what contributed to the change in net earnings and adjusted net earnings (non-IFRS measure, see page 2) in the first quarter of 2017, compared to the first quarter of 2016.
| CHANGES IN EARNINGS | THREE MONTHS | ||
| ($ MILLIONS) | ENDED MARCH 31 | ||
| IFRS | ADJUSTED | ||
| Net earnings (losses) - 2016 | 78 | (7) | |
| Change in gross profit by segment | |||
| (We calculate gross profit by deducting from revenue the cost of products and services sold, and depreciation and amortization (D&A), net of hedging benefits) | |||
| Uranium | Lower sales volume | (4) | (4) |
| Lower realized prices ($US) | (44) | (44) | |
| Foreign exchange impact on realized prices | (29) | (29) | |
| Lower costs | 11 | 11 | |
| Change - uranium | (66) | (66) | |
| Fuel services | Lower sales volume | (4) | (4) |
| Higher realized prices ($Cdn) | 12 | 12 | |
| Higher costs | (7) | (7) | |
| Change - fuel services | 1 | 1 | |
| NUKEM | Gross profit | - | - |
| Change - NUKEM | - | - | |
| Other changes | |||
| Lower administration expenditures | 11 | 11 | |
| Lower exploration expenditures | 5 | 5 | |
| Rabbit Lake reclamation provision | (6) | - | |
| Lower loss on disposal of assets | 4 | 4 | |
| Lower loss (lower gain) on derivatives | (75) | 19 | |
| Lower foreign exchange losses | 32 | 32 | |
| Higher (lower) income tax recovery | 5 | (21) | |
| Other | (7) | (7) | |
| Net losses - 2017 | (18) | (29) | |
ADJUSTED NET EARNINGS (NON-IFRS MEASURE)
Adjusted net earnings is a measure that does not have a standardized meaning or a consistent basis of calculation under IFRS (non-IFRS measure). We use this measure as a more meaningful way to compare our financial performance from period to period. We believe that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate our performance. Adjusted net earnings is our net earnings attributable to equity holders, adjusted to better reflect the underlying financial performance for the reporting period. The adjusted earnings measure reflects the matching of the net benefits of our hedging program with the inflows of foreign currencies in the applicable reporting period, and has also been adjusted for Rabbit Lake reclamation provisions, and income taxes on adjustments.
Adjusted net earnings is non-standard supplemental information and should not be considered in isolation or as a substitute for financial information prepared according to accounting standards. Other companies may calculate this measure differently, so you may not be able to make a direct comparison to similar measures presented by other companies.
The following table reconciles adjusted net earnings with our net earnings.
| THREE MONTHS | |||
| ENDED MARCH 31 | |||
| ($ MILLIONS) | 2017 | 2016 | |
| Net earnings (losses) attributable to equity holders | (18) | 78 | |
| Adjustments | |||
| Adjustments on foreign exchange derivatives | (22) | (116) | |
| Rabbit Lake reclamation provision | 6 | - | |
| Income taxes on adjustments | 5 | 31 | |
| Adjusted net losses | (29) | (7) | |
Selected segmented highlights
| THREE MONTHS | |||||
| ENDED MARCH 31 | |||||
| HIGHLIGHTS | 2017 | 2016 | CHANGE | ||
| Uranium | Production volume (million lbs) | 6.7 | 7.0 | (4)% | |
| Sales volume (million lbs)(1) | 5.7 | 5.9 | (3)% | ||
| Average realized price | ($US/lb) | 34.43 | 42.22 | (18)% | |
| ($Cdn/lb) | 45.51 | 58.29 | (22)% | ||
| Revenue ($ millions)(1) | 260 | 347 | (25)% | ||
| Gross profit ($ millions) | 44 | 110 | (60)% | ||
| Fuel services | Production volume (million kgU) | 2.6 | 3.3 | (21)% | |
| Sales volume (million kgU)(1) | 1.6 | 2.3 | (30)% | ||
| Average realized price | ($Cdn/kgU) | 33.22 | 26.18 | 27% | |
| Revenue ($ millions)(1) | 54 | 59 | (8)% | ||
| Gross profit ($ millions) | 14 | 13 | 8% | ||
| NUKEM | Sales volume U3O8 (million lbs)(1) | 2.3 | 0.1 | 2200% | |
| Average realized price uranium | ($Cdn/lb) | 33.57 | 39.32 | (15)% | |
| Revenue ($ millions)(1) | 78 | 2 | 3800% | ||
| Gross profit (loss) ($ millions) | - | - | - | ||
| (1) | There were no significant intersegment transactions in the periods shown. Please see our first quarter MD&A for more information. |
Management's discussion and analysis and financial statements
The first quarter MD&A and unaudited condensed consolidated interim financial statements provide a detailed explanation of our operating results for the three months ended March 31, 2017, as compared to the same period last year. This news release should be read in conjunction with these documents, as well as our audited consolidated financial statements and notes for the year ended December 31, 2016, annual MD&A, and our most recent annual information form, all of which are available on our website at www.cameco.com, on SEDAR at www.sedar.com, and on EDGAR at www.sec.gov/edgar.shtml.
Quarterly dividend notice
We announced today that our board of directors approved a quarterly dividend of $0.10 per share on the outstanding common shares of the corporation that is payable on July 14, 2017, to shareholders of record at the close of business on June 30, 2017.
Conference call
We invite you to join our first quarter conference call on Friday, April 28, 2017 at 1:00 p.m. Eastern.
The call will be open to all investors and the media. To join the call, please dial (800) 319-4610 (Canada and US) or (604) 638-5340. An operator will put your call through. The slides and a live webcast of the conference call will be available from a link at www.cameco.com. See the link on our home page on the day of the call.
A recorded version of the proceedings will be available:
- on our website, www.cameco.com, shortly after the call
- on post view until midnight, Eastern, May 28, 2017, by calling (800) 319-6413 (Canada and US) or (604) 638-9010 (Passcode 1249)
2017 quarterly report release dates
We plan to announce our remaining 2017 quarterly results as follows:
- second quarter consolidated financial and operating results: before markets open on July 27, 2017
- third quarter consolidated financial and operating results: before markets open on October 27, 2017
The 2018 date for the announcement of our fourth quarter and 2017 consolidated financial and operating results will be provided in our 2017 third quarter MD&A. Announcement dates are subject to change.
Profile
We are one of the world's largest uranium producers, a significant supplier of conversion services and one of two CANDU fuel manufacturers in Canada. Our competitive position is based on our controlling ownership of the world's largest high-grade reserves and low-cost operations. Our uranium products are used to generate clean electricity in nuclear power plants around the world. We also explore for uranium in the Americas, Australia and Asia. Our shares trade on the Toronto and New York stock exchanges. Our head office is in Saskatoon, Saskatchewan.
