New CEO announced for EnergySolutions; shares take a nose dive
SALT LAKE CITY — Nuclear power contractor EnergySolutions named a new chief executive officer early Monday morning in a corporate shakeup that triggered a plunge in its stock by nearly 55 percent at the end of the day trading.
The announcement comes as corporate profits for the Salt Lake City-based company for the first quarter of 2012 have dipped in sharp contrast to earnings for the same period last year.
EnergySolutions, which has posted losses in its earnings for two consecutive years, will now be headed up by David Lockwood, a member of the company's board of directors since 2010. He replaces Val Christensen at the helm, but Christensen will remain with the company as a strategic advisor.
“The board determined that the time is right for new leadership, so that the company is positioned to take advantage of its full long-term potential in a changing industry environment,” said Steven R. Rogel, chairman, EnergySolutions.
The change in leadership was accompanied by sharp declines in the company's stock price, which had closed Friday at $3.59 but plunged Monday nearly 55 percent — to $1.62 per share.
In addition to the management changes, the company revised its earning outlook for the year, blaming a continued slowdown in shipments to the firm's facility in Clive in both the government and commercial businesses and a less robust cost savings plan than what had been predicted.
“We have a lot of work ahead of us, but we also have extraordinarily talented engineers and scientists and deep industry experience. These are fundamental strengths upon which we will build our future," Lockwood said.
Lockwood, 52, is a partner with ValueAct Capital, an investment management firm, and one of the company’s largest institutional investors since 2007.
Prior to that, Lockwood was chairman and chief executive officer of Liberate Technologies (NYSE: LBRT), a provider of software to digital media companies, from 2003 to 2006.
He has a bachelor's degree from Miami University in Ohio and a master's in business administration from the University of Chicago.
During a conference call with investors, Lockwood said one of the company's financial hurdles has been its decommissioning of two nuclear reactors on the shores of Lake Michigan. The first stewardship license to the company, awarded in 2010, represents the largest dismantling of a nuclear power plant ever under taken in the country.
Lockwood said what has been discovered since that project's embrace was that risks outpaced returns — and while still profitable — the decommissioning has failed to adequately compensate the company for its capital investments.
"We undertook Zion for strategic, not financial reasons," he said, but added that any future decommissioning projects will have to meet stringent guidelines for compensation.
One of EnergySolutions' most ardent critics — HEAL Utah – said the company's financial turmoil and leadership changes should give state leaders pause when it comes to disposal of any new types of waste streams at its Clive facility in Tooele County.
“The Herbert administration needs to take a cold, hard look at this company and their difficulties before giving the green light to dump dangerous new waste streams in Utah,” says Matt Pacenza, HEAL's policy director.
“If the company has to go out of business, it’s the people of Utah who will be responsible for this massive nuclear waste dump,” he said.
But Gary Gygi, a Utah County-based financial advisor, said Monday's stock plunge is by no means reflective of the financial health of the company going forward. "This absolutely does not tell anything about the long-term prospects of the company."
Gygi said while the financial markets can often weather good news or bad news — a jolt of "uncertainty" via new leadership announcements and downsizing of projected earnings can set the panic button for investors.
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