Cameco (TSX: CCO) (NYSE: CCJ) reported its consolidated financial and operating results for the second quarter ended June 30, 2021 in accordance with International Financial Reporting Standards (IFRS).
“Our second quarter results reflect the continued execution of our strategy and the proactive decisions to suspend production to protect the health and safety of our workers, their families and their communities,” said Tim Gitzel, Cameco’s president and CEO. “We are not at the regular tier-one run rate of our business. We are taking the steps we believe are necessary, including investing in digital and automation technologies, to support the restart of our tier-one assets to create a more flexible asset base that will allow us to align our production decisions with our contract portfolio commitments and opportunities, allow us to eliminate the care and maintenance costs incurred while our tier-one production is suspended, and to benefit from the very favourable life-of-mine economics our tier-one assets provide.
“Despite the near-term costs of our strategy and associated with the precautionary production suspensions at Cigar Lake, we have a strong balance sheet. We ended the quarter with about $1.2 billion dollars in cash. We also successfully added an additional 7 million pounds U3O8 to our long-term sales contract portfolio, bringing the total contracted so far in 2021 to 16 million pounds.
“We are excited about the future of nuclear power generation, about the fundamentals of uranium supply and demand and about the prospects for our company and remain committed to our tier-one strategy and to our vision. Globally, we see demand for both traditional and non-traditional uses of nuclear power growing as the increasing focus on electrification while phasing out carbon intensive sources of energy continues to take hold.
“Our vision to energize a clean-air world recognizes that we have an important role to play in enabling the vast reductions in greenhouse gas emissions required to accomplish the targets being set by countries and companies around the world to achieve a resilient, net-zero carbon economy. We are vertically integrated across the nuclear fuel cycle. Our uranium and fuel services products are used around the world in the generation of safe, carbon-free, affordable, base-load nuclear energy. In addition, we are exploring other emerging and non-traditional opportunities within the fuel cycle, which align well with our commitment to responsibly and sustainably manage our business and increase our contributions to global climate change solutions, such as our investment in Global Laser Enrichment LLC and the memorandum of understanding signed with GE Hitachi Nuclear Energy and Global Nuclear Fuel-Americas to explore several areas of cooperation to advance the commercialization and deployment of BWRX-300 small modular reactors in Canada and around the world.
“We believe we have the right strategy to achieve our vision and we will do so in a manner that reflects our values. For over 30 years, we have been delivering our products responsibly. Sustainability is at the heart of what we do. Embedded in all our decisions is a commitment to addressing the environmental, social and governance risks and opportunities that we believe will make our business sustainable over the long term.”
Consolidated financial results
|THREE MONTHS||SIX MONTHS|
|CONSOLIDATED HIGHLIGHTS||ENDED JUNE 30||ENDED JUNE 30|
|($ MILLIONS EXCEPT WHERE INDICATED)||2021||2020||CHANGE||2021||2020||CHANGE|
|Gross profit (loss)||12||(14||)||>100%||(28||)||21||>(100)%|
|Net losses attributable to equity holders||(37||)||(53||)||30||%||(42||)||(72||)||42||%|
|$ per common share (basic)||(0.09||)||(0.13||)||29||%||(0.10||)||(0.18||)||44||%|
|$ per common share (diluted)||(0.09||)||(0.13||)||29||%||(0.10||)||(0.18||)||44||%|
|Adjusted net losses (non-IFRS, see below)||(38||)||(65||)||42||%||(67||)||(36||)||(86||)%|
|$ per common share (adjusted and diluted)||(0.10||)||(0.16||)||38||%||(0.17||)||(0.09||)||(89||)%|
|Cash provided by (used in) operations (after working capital changes)||152||(316||)||>100||%||197||(134||)||>100||%|
The financial information presented for the three months and six months ended June 30, 2020 and June 30, 2021 is unaudited.
The following table shows what contributed to the change in net earnings and adjusted net earnings (non-IFRS measure, see below) in the second quarter and first six months of 2021, compared to the same period in 2020.
|CHANGES IN EARNINGS||THREE MONTHS ENDED||SIX MONTHS ENDED|
|($ MILLIONS)||JUNE 30||JUNE 30|
|Net losses – 2020||(53||)||(65||)||(72||)||(36||)|
|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))|
|Uranium||Lower sales volume||12||12||8||8|
|Higher realized prices ($US)||5||5||9||9|
|Foreign exchange impact on realized prices||(32||)||(32||)||(41||)||(41||)|
|Lower (higher) costs||23||23||(38||)||(38||)|
|Change – uranium||8||8||(62||)||(62||)|
|Fuel services||Lower sales volume||(1||)||(1||)||(5||)||(5||)|
|Higher realized prices ($Cdn)||11||11||15||15|
|Change – fuel services||12||12||10||10|
|Lower (higher) administration expenditures||(4||)||(4||)||19||19|
|Lower exploration expenditures||–||–||3||3|
|Change in reclamation provisions||17||–||33||–|
|Higher earnings from equity-accounted investee||1||1||7||7|
|Change in gains or losses on derivatives||(25||)||7||49||2|
|Change in foreign exchange gains or losses||6||6||(44||)||(44||)|
|Canadian Emergency Wage Subsidy in 2021||9||9||21||21|
|Change in income tax recovery or expense||(9||)||(13||)||(1||)||18|
|Net losses – 2021||(37||)||(38||)||(42||)||(67||)|
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 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 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 reclamation provisions for our Rabbit Lake and US operations, which had been impaired, 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 net earnings for the second quarter and first six months of 2021 and compares it to the same periods in 2020.
|THREE MONTHS||SIX MONTHS|
|ENDED JUNE 30||ENDED JUNE 30|
|Net losses attributable to equity holders||(37||)||(53||)||(42||)||(72||)|
|Adjustments on derivatives||(9||)||(41||)||(18||)||29|
|Reclamation provision adjustments||6||23||(16||)||17|
|Income taxes on adjustments||2||6||9||(10||)|
|Adjusted net losses||(38||)||(65||)||(67||)||(36||)|
Every quarter we are required to update the reclamation provisions for all operations based on new cash flow estimates, discount and inflation rates. This normally results in an adjustment to an asset retirement obligation asset in addition to the provision balance. When the assets of an operation have been written off due to an impairment, as is the case with our Rabbit Lake and US ISR operations, the adjustment is recorded directly to the statement of earnings as “other operating expense (income)”. See note 8 of our interim financial statements for more information. This amount has been excluded from our adjusted net earnings measure.
Selected segmented highlights
|THREE MONTHS||SIX MONTHS|
|ENDED JUNE 30||ENDED JUNE 30|
|Uranium||Production volume (million lbs)||1.3||–||n/a||1.3||2.1||(38||)%|
|Sales volume (million lbs)||6.0||9.2||(35||)%||11.0||15.2||(28||)%|
|Average realized price||($US/lb)||33.56||32.99||2||%||32.97||32.36||2||%|
|Revenue ($ millions)||252||426||(41||)%||457||674||(32||)%|
|Gross loss ($ millions)||(26||)||(34||)||24||%||(91||)||(29||)||>(100)%|
|Fuel services||Production volume (million kgU)||3.6||2.7||33||%||7.6||6.4||19||%|
|Sales volume (million kgU)||3.1||3.2||(3||)%||5.7||6.3||(10||)%|
|Average realized price||($Cdn/kgU)||32.57||28.95||13||%||32.26||29.43||10||%|
|Revenue ($ millions)||100||92||9||%||184||186||(1||)%|
|Gross profit ($ millions)||36||24||50||%||63||53||19||%|
Management’s discussion and analysis and financial statements
The second quarter MD&A and unaudited condensed consolidated interim financial statements provide a detailed explanation of our operating results for the three and six months ended June 30, 2021, as compared to the same periods 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, 2020, first quarter and annual MD&A, and our most recent annual information form, all of which are available on our website at cameco.com, on SEDAR at sedar.com, and on EDGAR at sec.gov/edgar.shtml.
The technical and scientific information discussed in this document for our material property Cigar Lake was approved by the following individual who is a qualified person for the purposes of NI 43-101:
Cameco is one of the largest global providers of the uranium fuel needed to energize a clean-air world. Our competitive position is based on our controlling ownership of the world’s largest high-grade reserves and low-cost operations. Utilities around the world rely on our nuclear fuel products to generate power in safe, reliable, carbon-free nuclear reactors. Our shares trade on the Toronto and New York stock exchanges. Our head office is in Saskatoon, Saskatchewan.
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We acknowledge the [financial] support of the Government of Canada.