Market Overview

Cameco reports third quarter results

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SASKATOON, Saskatchewan, Nov. 01, 2019 (GLOBE NEWSWIRE) -- Cameco (TSX:CCO, NYSE:CCJ) today reported its consolidated financial and operating results for the third quarter ended September 30, 2019 in accordance with International Financial Reporting Standards (IFRS).

"Our results reflect the outlook we provided for 2019 and the normal quarterly variations in contract deliveries," said Tim Gitzel, Cameco's president and CEO. We are on track to achieve our outlook, and in fact, have increased our revenue outlook for 2019, demonstrating our resilience as we position for a market transition.

"We continue to execute on all fronts of our strategy, operational, marketing and financial. We are responsibly managing our supply to meet our sales commitments, and during the quarter we further strengthened our balance sheet. We reduced our outstanding debt by one-third, retiring $500 million in debt. In addition, we extended the maturity date of our revolving credit facility to November 2023, while also reducing it by $250 million. We don't have a history of drawing on the excess capacity and, with $864 million in cash and short-term investments on our balance sheet, we don't anticipate needing it. Therefore, it does not make sense to pay to maintain excess capacity.

"We are optimistic about the long-term fundamentals driven by the increasing recognition of the role nuclear must play in ensuring safe, reliable, and affordable low-carbon electricity generation. We recognize that today's low price is creating tomorrow's opportunity for us. The fact that we have tier-one production shutdown tells us this market needs to transition to ensure those pounds will be available to fuel growing demand. The price needs to transition to one where price is set by the production cost curve. When we look at utilities uncovered requirements, and the success we are having on the long-term contracting front, we know there is acceptable business to be done. In fact, this activity has been a leading indicator in past uranium cycles, which gives us confidence that the uranium market will undergo the same transition we have seen in the conversion market."

  • Net loss of $13 million; adjusted net loss of $2 million: Results are as expected, driven by normal quarterly variations in contract deliveries and in accordance with our 2019 outlook. Adjusted net earnings is a non-IFRS measure, see below. 
  • Updated outlook for 2019: We have updated the outlook provided for 2019 consolidated revenue, uranium revenue and average realized price, fuel services sales volume and revenue. See Outlook for 2019 in our third quarter MD&A.
  • Strengthened balance sheet: At September 30, 2019, we had $864 million in cash and short-term investments on our balance sheet. During the quarter, we retired the $500 million series D debenture that matured in September 2019. In addition, we extended the maturity of our unsecured revolving credit facility to November 2023, and reduced it by $250 million, to $1.0 billion. See Financing activities in our third quarter MD&A.
  • Annual dividend declared: For 2019, an annual dividend of $0.08 per common share has been declared, payable on December 13, 2019, to shareholders of record on November 29, 2019. The decision to declare a dividend by our board is based on our cash flow, financial position, strategy and other relevant factors including appropriate alignment with the cyclical nature of our earnings.
Consolidated financial results  
                 
    THREE MONTHS   NINE  MONTHS    
CONSOLIDATED HIGHLIGHTS ENDED SEPTEMBER 30   ENDED SEPTEMBER 30    
($ MILLIONS EXCEPT WHERE INDICATED)  2019    2018   CHANGE  2019    2018 CHANGE  
Revenue  303    488   (38)%  988    1,260 (22)%  
Gross profit (loss)  (2 )  (6 ) 67%  57    89 (36)%  
Net earnings (losses) attributable to equity holders  (13 )  28   >(100%)  (54 )  6 >(100%)  
  $ per common share (basic)  (0.03 )  0.07   >(100%)  (0.14 )  0.02 >(100%)  
  $ per common share (diluted)  (0.03 )  0.07   >(100%)  (0.14 )  0.02 >(100%)  
Adjusted net losses (non-IFRS, see below)  (2 )  15   >(100%)  (53 )  9 >(100%)  
  $ per common share (adjusted and diluted)  (0.01 )  0.04   >(100%)  (0.13 )  0.02 >(100%)  
Cash provided by operations (after working capital changes)  232    278   (17 )%  253    610 (59 )%  
 

The financial information presented for the three months and nine months ended September 30, 2018 and September 30, 2019 is unaudited.

NET EARNINGS

The following table shows what contributed to the change in net earnings and adjusted net earnings (non-IFRS measure, see below) in the third quarter and first nine months of 2019, compared to the same period in 2018.

CHANGES IN EARNINGS THREE MONTHS ENDED NINE MONTHS ENDED
($ MILLIONS) SEPTEMBER 30 SEPTEMBER 30
  IFRS ADJUSTED IFRS ADJUSTED
Net earnings – 2018  28    15    6    9  
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  4    4    (19 )  (19 )
  Higher (lower) realized prices ($US)  6    6    (68 )  (68 )
  Foreign exchange impact on realized prices  3    3    27    27  
  Higher costs  (7 )  (7 )  (11 )  (11 )
  Change – uranium  6    6    (71 )  (71 )
Fuel services Higher (lower) sales volume  (1 )  (1 )  7    7  
  Higher (lower) realized prices ($Cdn)  4    4    (16 )  (16 )
  Lower (higher) costs  (3 )  (3 )  19    19  
  Change – fuel services  -    -    10    10  
Lower administration expenditures  15    15    16    16  
Lower exploration expenditures  2    2    6    6  
Change in reclamation provisions  2    -    21    -  
Higher earnings from equity-accounted investee  -    -    20    20  
Change in gains or losses on derivatives  (37 )  (4 )  49    -  
Change in foreign exchange gains or losses  14    14    (20 )  (20 )
Arbitration a
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