Consolidated Results
| Highlights ($ millions except where indicated) |
Three months ended December 31 |
||
|---|---|---|---|
| 2015 | 2014 | Change | |
| Revenue | 975 | 889 | 10% |
| Gross profit | 282 | 251 | 12% |
| Net earnings (loss) attributable to equity holders | (10) | 73 | (114)% |
| $ per common share (basic) | (0.03) | 0.18 | (114)% |
| $ per common share (diluted) | (0.03) | 0.18 | (114)% |
| Adjusted net earnings (non-IFRS) | 151 | 205 | (26)% |
| $ per common share (adjusted and diluted) | 0.38 | 0.52 | (27)% |
| Cash provided by operations (after working capital changes) | 503 | 236 | 113% |
Net earnings
In the fourth quarter of 2015, our net loss was $10 million ($(0.03) per share diluted), a decrease of $83 million compared to net earnings of $73 million ($0.18 per share diluted) in 2014, mainly due to:
- greater losses on foreign exchange derivatives resulting from the weakening of the Canadian dollar
- lower income tax recovery due to the reduction of our deferred tax asset in the US
- higher impairment charges in 2015 ($210 million in 2015, $131 million in 2014)
partially offset by:
- higher uranium gross profits resulting mainly from a higher average realized price and higher sales volumes
- higher gross profits from our fuel services segment due to a higher average realized price
- lower exploration expenditures
- the reduction of our provision related to the CRA litigation
In addition, in the fourth quarter of 2014 there was a favourable settlement of $37 million with respect to a dispute regarding a long-term supply contract with a utility customer that contributed to the higher net earnings in the fourth quarter of 2014 compared to the same period in 2015. The impact of the settlement was partially offset by the write-off of $41 million of assets under construction as a result of changes made to the scope of a number of projects in the fourth quarter of 2014.
Adjusted net earnings
On an adjusted basis, our earnings this quarter were $151 million ($0.38 per share diluted) compared to $205 million ($0.52 per share diluted) (non-IFRS measures) in 2014, mainly due to:
- a lower income tax recovery primarily due to the reduction of our deferred tax asset in the US
partially offset by:
- higher uranium gross profits resulting mainly from a higher average realized price and higher sales volumes
- higher gross profits from our fuel services segment mainly due to a higher average realized price
- lower exploration expenditures
- the reduction of our provision related to the CRA litigation
In addition, in the fourth quarter of 2014 there was a favourable settlement of $37 million with respect to a dispute regarding a long-term supply contract with a utility customer that contributed to the higher adjusted net earnings in the fourth quarter of 2014 compared to the same period in 2015.
We use adjusted net earnings, a non-IFRS measure, as a more meaningful way to compare our financial performance from period to period. The following table reconciles adjusted net earnings with our net earnings.
| ($ millions) | Three months ended December 31 |
|
|---|---|---|
| 2015 | 2014 | |
| Net earnings (loss) attributable to equity holders | (10) | 73 |
| Adjustments | ||
| Adjustments on derivatives (pre-tax) | 10 | 10 |
| NUKEM purchase price inventory recovery | — | (4) |
| Impairment charges | 210 | 131 |
| Income taxes on adjustments | (59) | (46) |
| Write-off of assets | — | 41 |
| Adjusted net earnings | 151 | 205 |
Administration
| Three months ended December 31 |
|||
|---|---|---|---|
| ($ millions) | 2015 | 2014 | Change |
| Direct administration | 51 | 52 | (2)% |
| Stock-based compensation | 4 | 3 | 33% |
| Total administration | 55 | 55 | — |
Direct administration costs were $51 million in the quarter, $1 million lower than the same period last year due to the timing of expenditures, partially offset by higher legal costs as our CRA dispute progresses toward trial. Stock-based compensation expenses were $1 million higher than the fourth quarter of 2014. See note 25 to the financial statements.
Quarterly trends
| Highlights ($ millions except per share amounts) |
2015 | 2014 | ||||||
|---|---|---|---|---|---|---|---|---|
| Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
| Revenue | 975 | 649 | 565 | 566 | 889 | 587 | 502 | 419 |
| Net earnings (losses) attributable to equity holders | (10) | (4) | 88 | (9) | 73 | (146) | 127 | 131 |
| $ per common share (basic) | (0.03) | (0.01) | 0.22 | (0.02) | 0.18 | (0.37) | 0.32 | 0.33 |
| $ per common share (diluted) | (0.03) | (0.01) | 0.22 | (0.02) | 0.18 | (0.37) | 0.32 | 0.33 |
| Adjusted net earnings (non-IFRS) | 151 | 78 | 46 | 69 | 205 | 93 | 79 | 36 |
| $ per common share (adjusted and diluted) | 0.38 | 0.20 | 0.12 | 0.18 | 0.52 | 0.23 | 0.20 | 0.09 |
| Earnings (loss) from continuing operations | (10) | (4) | 88 | (10) | 72 | (146) | 127 | 4 |
| $ per common share (basic) | (0.03) | (0.01) | 0.22 | (0.02) | 0.18 | (0.37) | 0.18 | 0.01 |
| $ per common share (diluted) | (0.03) | (0.01) | 0.22 | (0.02) | 0.18 | (0.37) | 0.18 | 0.01 |
| Cash provided by continuing operations (after working capital changes) | 503 | (121) | (65) | 134 | 236 | 263 | (25) | 7 |
Key things to note:
- Our financial results are strongly influenced by the performance of our uranium segment, which accounted for 70% of consolidated revenues in the fourth quarter of 2015 and 68% of consolidated revenues in the fourth quarter of 2014.
- The timing of customer requirements, which tends to vary from quarter to quarter, drives revenue in the uranium and fuel services segments.
- Net earnings do not trend directly with revenue due to unusual items and transactions that occur from time to time. We use adjusted net earnings, a non-IFRS measure, as a more meaningful way to compare our results from period to period.
- Cash from operations tends to fluctuate as a result of the timing of deliveries and product purchases in our uranium and fuel services segments.
- Quarterly results are not necessarily a good indication of annual results due to the variability in customer requirements noted above.