Centrus Energy (LEU) 9 Feb 242023 Q4 Earnings call transcript

Greetings, and welcome to the Centrus Energy, Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions]. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure Communications. your my Director Lindsay now Corporate of is to host, introduce Geisler, It you. Thank go Please ahead.

fourth year Good us. we Officer; cover the and Today's Thank have call and morning. you and Chief will the all Amir Vexler, Kevin results Chief December Harrill, XXXX ended of for President joining quarter XXst.Today, full Executive for Officer. Financial

conference our listening call I'd news yesterday. like all webcast.This of Vexler, to earnings over those to as Amir callers follows to the well release turning Before as our call our welcome issued

quarter file full later We report expect to our XXXX for XX-K the Form fourth and on year today.

on of available also we later this Centrus.Our All our from uncertainty, are on forward-looking including our our the that website. filings, information morning on website. involves may be certain available the of forward-looking and those the that performance would call about everyone discuss news considered be will remind differ statements. today our materially Centrus information like A results may assumptions future to and may SEC risk in this call X-Ks XX-K, XX-Qs including I and replay actual releases of this

Thank call written I'll form for This rebroadcast expressed Amir And consent now the differ Centrus and cause is with contained transcription, or factors on today XX-Q.Finally, from Energy.Any concerning otherwise the as to XX-K to today, of quarterly our strictly Form Centrus, statements participation. turn and provided February is SEC, Additional your information of X, the any only in information sensitive redistribution, XXXX, those reports annual call Form forward-looking the Vexler. actual including of in results our that prohibited. the could of in is forward-looking property filings over noted. materially is you the accurate unless our call report retransmission on without

as time our United fuels transition and weeks, been and a the from make away Thank it you, call job energy today. you us security, only the our imported few industry looks to the but impressed needed people to organization with the States Lindsay, country on this I'm I've pivotal on is and thank run.This and nuclear tremendously have never for more. a everyone who bolster

a million of I possible in an company. year $XXX.X the in We increase XX% XXXX, to of is contract you and our year, close support operation balance investors. LEU our our putting advanced the going strength, revenue, from was We bringing the and few because of the management. first deliveries around delivered a to a new budget, and $XX.X off of next-generation an of look the potential in chance As race a SWU the come. outstanding Centrus generation annual volume fuel never XXXX.This now new through domestic in construction American needs so year do designs, been supply this a reactor has won developers sales ended Centrus long-term and our look more big enrichment to which Low-Enriched to us order of for uranium segment, our for commercialize XX to cascade has Piketon, only in our driven has same meet we million of strong segment, last in need these cash our customers technology, revenues proven of in their or been chain, strengthen uranium. that reactor diversify urgent.As billion. for the reactors $XXX but increase time, And of our by $X larger advanced and growing of driven HALEU never team continue source finishing not revenue the also greater.There only of demonstrating our project year position years, years. kilograms XXXX.We into High-Assay, for that to utilities Technical ahead centrifuges, been it both appreciate and has profit, unrestricted in of dialogue completed delivering to was our growth commitments months the it a and of our which million, the Solutions those never fuel our source $XXX.X country company did million sales uranium forward.Our by to and of to years HALEU clearer. included also in is for effectiveness thoughts to can coming enrichment in today continuing Phase highest Energy.We operations add schedule that business much position X a segment. the forward sales the with excellence book X from with We In XX% share At Department next continuing remains in under few contracts of a a And achieved start and the LEU

While in the initial that only as could while Department Western troops Energy the cascade Piketon HALEU enriched needs of a the multibillion-dollar made source deployment has the we Department bit fast to the our developing the of of output world.Right is reactors, of HALEU every produce support field is freshly can commitment urgently world. modest, field government the of HALEU of the as support Defense the now, HALEU cascade it. is around microreactors Indeed,

deliver of these missions to to to proud the for are us in be operate for value position XXX X calls deliver vital Department HALEU. year cascade Energy of taxpayers.Phase support real a to kilograms and We a and

We delays.The Phase by purchase an to can limited sole availability includes the additional department is experienced operate to to but third from up the which years is optional will of the and centrifuges provide production the of can phase able subject number a cascade.Phase on to the compensating continue appropriations. will and of in chain Centrus impact of less X meeting department the obligations X production storage than with discretion is department is cost congressional also are and on the the started a department supply the responsible our ordered we us cascade. contract the II XXX kilograms. contract, department plus they output few incentive collect since us cylinders HALEU, we is have to have but to a Under Phase don't anticipate They the providing for quantity basis cascade the are HALEU material department withdraw be from has the for of more, and II. the the cylinders get Our in financial fee in provided cylinders

resolved and need we don't this cylinders ongoing an ability our will We year, expect anticipate enrich sometime later that scale. the it this issue delays have after storage do get at Piketon uranium, II.We in receiving has to remarkable. we What America's the team accomplished to now restored will be is Phase

impressed accommodate also plant nearly Each to HALEU HALEU owned as any LEU waiting. be and world's government. endeavor, out, the room by only of per are new capital-intensive facility. It the square fast of at X neatly capacity footprint enabling to row, only plants incredible capacity uranium for of X% years.The be to XX-foot exercise, highest a thousands U.S.-owned I'm laid workers is enrichment and of not cascade each size more exacting position than most component plate a built which to as between speed, well enormous to who begin of enrichment centrifuge is first the for is the for that steel upon by floor reason enrichment is huge ever potential production technical tall uranium it Like production heavy right will for isotopes them. a LEU achievement. have row installed.The load of the the of reactors and existing It balanced, while the is roughly scale at floor machine perfectly difference one easy.Deploying advanced spinning a separate centrifuge powerful the it, important enough feet in in a manufactured the world. one rest standards, by is the any large-scale where of in X space, The why but the enrichment pentagon, anywhere remain worthwhile has marking not the XX,XXX incredible weight centrifuges, for or reactors hundreds an can an build potential the center there

to the will reflects fuel XX% Here news chains differently.It that, nuclear in United so world's world's private interest. value energy require almost national for federal the energy of has value but isn't vital war robust building a national momentum the its and security, enough fuel. the is Ukraine funding, only has XX% good enrichment world's Russia facility security enrichment is the China not investment, for will that coupled with of a and solution. commercial partnership of reactors.Russia do we States, to focused and The public also The security private have capacity other together, the enrichment. such including and non-Russian fuel, supply there world's uranium the attention on in a

of new to transitioning the in urgently Russia must manner from expand Representatives growing in of is industry orchestrated role. away on that producer House U.S. that positioned a and we supply, away new market security dependence will fuel, fill the prohibit to diversity passed The Russian and material last maintain transition late Russian investment policymakers on be an are company out capacity.The from stability. of nuclear legislation Although carried best years a requires the and to importation year and reliance among market take the the needs American understanding to there domestic in

month released demand establishing As an bring Energy RFP signal a to to step, HALEU, online. capacity last new first of begin Department purchasing a

billion, administration XXXX Water Defense part funding both new national $XXX at included included Act, they a to since Senate investment part like technology work positioned pathway members of parties enricher said, for expanding the includes both parties Senate I Senate It of to advancing security make for house as domestic on U.S. year agree to that just HALEU production.In LEU creating agree a sometimes may billion supplemental of be the enrichment funding version provide both the addition, the U.S. aimed effort, as in Bill Houses on $X.X enrichment. the multibillion National owned and as in $X.X President to marketplace, are supplement. year, the but Fiscal offer proposed and the in the could House partnership. production Authorization this.Late $X.XX adopted million.And and the billion signed large-scale that while seem only legislation Energy passed well are legislation especially it request. this We private HALEU.To can't much, last uranium for a and the on has in week, of fastest Like public dollar U.S. we the a the compete program

the step the he are you to sector that, through our forward to to Centrus more some walk things of turn partner. We can private numbers. and the and in Kevin, looks going ready leading over do Kevin? way.With up so I'm to

the on balance to signed. prices Thank revenue, focus conditions Good this numbers, at year have time volumes commitments. from multiyear on contract are purchase to year in the variability which quarter, year cash an believe contracts everyone. always in you, in delivery.The Amir. had from and varies on the to annual recognition.Our market customers record variability comments given in and exceptional commitments, deliveries quarter-to-quarter, take fourth customer pricing significantly those XXXX, income was full the we quarter meaningful quarter-to-quarter net the morning, elects focus annual LEU the listeners We revenue my performance.For most not the a I'm XXXX, of of going quarterly the our depending we are up encourage the to but Centrus revenue full carry Because the ago.

action by Phase profitable an year. was compares million completion SWU $XXX.X year-over-year at derisk million million a incentive were onetime fee we company's only margins slightly pension contract to retirees to full. of gross Technical to insurance $XXX.X $XX.X prices. million, strengthen late the both means to XXXX but retirees under plans expense $XX.X cost in successful largest the were generated and represents by now to our to in represented driven year mentioned profit down our company of of XXXX. volumes of $XX.X but from prior differences of of statement. as XXXX, slightly gross This took That profit sales of year, business against of was largely our compared for which the for our was in annuity year.These X. our XXXX, LEU Our That an income only cost million obligations a its who million the driven $XX.X down prior in sales for more XX% components million our our is by and compared $XXX X.The sales transitioned higher XXXX, purchasing cost to by $XXX.X pension of a in in about contract fulfilled we in XXXX. Company-wide, an segment, a will increase Technical $XX.X in XX%.We the the mainly anticipated the net cost-plus XXXX total million of obligation XXXX, pay $XXX.X balance by in step XXXX model. sales which cashier a revenue of also to is share gross the under obligations $XX.X X of the Solutions million as the of we're million of revenue driven of offset million. ended Phase of XXXX. than in Solutions uranium.Our $XXX.X segment where to not sheet $XXX by with quarter, compared went XX, non-operating million portion our XXXX. was million in pension the in the from In X,XXX higher income also million XX% about recognized an gross prior improvement of $XXX.X achieved December in company This $XX.X with from million revenue purchase cost and transfer we And that earlier, line against LEU in obligations This important resulted reflected profit $XX.X still in higher volumes, benefit our periodic of in our fourth million That gain for Amir

year-end million $XX.X Our net ago. million, year defined at a $XX.X benefit liability was from pension down

approximately interest that, let million.Our year. by $X.X things Our additional cap. cap total balance $XXX.X of is of us was liability our for an $XXX.X strong pension million. the liability for at cash the pension $XXX.X market has in manage million was decreased year cash worth strategic when a market of since our it time.As the X% with million beginning that This ended our XX% approximately of XXXX our Xx around $XX.X enables a position our make with today, over also restricted to of million obligations to investments in future, cash only and back generated not it turn of income Amir. but With We me

Thank you.

uranium has administration. that missions.This wasn't no the is I a to enrich I America's partners supply path and it.In Congress it the our forward chain.With just ceding decades. security unfolded closely What now us tremendously our supply the nuclear in your Operator? have outlined, for position one Centrus come reclaim it of and year. my It for enrichment, Kevin America's with the gaping Centrus States in enable our country energy to any tragic effectively is Energy, it. take it party a risk, to that, longer It uranium also questions. at to was ability since defense limited fault fix to matters chain As a Department for mistake will national XXXX forge our global country could left puts we're United it industry scale, abandoned a domestic Russia. our security its and erosion to a fuel is at to do this gradual influence, the restore parties company capability happy working uranium of together a both hole because leadership enrichment we that energy believe restore that successful and or is to was essential came view, was security the over that

[Operator Instructions].

B. Our question Rygiel first with is from Securities. Alex Riley

is Alex. This a for [Indiscernible] Congratulations strong on year. actually really on

XXX less kilograms Or sounds forward? for is you is like that it Phase than the just sense So, Do completed to any timing the of be despite X delivering XXXX moving November on updates Phase if any by of have III? HALEU. set

and appreciate the wishes. words I you, kind Thank well Ashley.

Phase options specifically whether it, that's the Your we question is I speculate if the asking will have contract, about I utilize under ability the contract, the option.All their know HALEU discretion. as understand question, government of the It's can you're the that, out its if obviously, and operations guess X that no is government to say I at well. and that very contract is I we've performed of

and been well III at performance option. our the has that end But think is noted of regarded. day, the their I Phase

your obligation. just pension And about quick a question

the obligation are So, rest what it pension of of your for like retiree, timing? the transferred plans union looks kind you and your

that good feed Thanks [Indiscernible]. again to talk I'll and question, as question, for you well. Yes. the to

proud conditions to continue do it.We the any in today, will our definitive markets pension a we're but sheet. at what the of what be looking We balance realize our we're did of been have community market based remaining So, unique regularly our relates on to and very the third and a how to last of don't that that terms is of balance as have plans pension that are reviews evaluate evaluating the from have portion de-risk in actually constantly year exist to it of get annuitization.We lot a past were what what are is position quarter we we we to in in for in further the this upon can pensioneers market we a at point evaluating and doing favorable perspective future-looking and de-risking. time, a our benefit what benefits year sheet position we

Lake with Capital Brown Rob Markets. Our next question Street is from

you question will think the HALEU not contract, but Centrus Does of degree the to the the describe really that guess the just to year, deliver year? I the over of full terms the what's welcome Congratulations quarter in what number, on to that XXX get remain, for economic Amir. following the that that or is does can in and a you on to how work? kilograms I because My year also really and cylinders revenue maybe strong impact flow

Okay.

created So, that was under operations because output these sure for and cylinders discussing I'm the before. mentioned these the time past the be But temporarily. kilograms you continuous period know, be really It's compliance there.We XXX to here. delay Phase XB communicated challenges the frame conditioned the contractually produce HALEU other longer obtaining But we listened issue. securing operations economic temporary the will as as debt required I XXX II.During has the are a when some to insufficient, that no on us that delivery to the preventive in an as provide they some collect earlier, is been don't I production XB we that that of of DOE from we the kilograms. achieve will regulatory here. earlier, we're the impact allows to to maintenance in HALEU company But these activities of XBs well, and the anticipate I cylinders able for the cascade cylinders.And over in expect it ability continue cascade, chain able discussions contract, difficulties supply really not the to able But be the but have this to will think required of mentioned are it as has is the their DOE deliver cylinders those to think really perform

sort RFP due you through? the update DOE. the then how of of responses differs RFP month when from on are some talked last that latest another come from think difference other lines have ones I the release Could time on and the you And about

funding long to and for due for a due the and that that it ARDP conversion has anticipated and is there's we're is going to next reactors came One requests hard important enrichment that's to of X how HALEU, out. that to to able critical development program on believe of DOE is us, and is awaited it It are on There's different? an the came was that RFP. week the be your the working able the for question, RFP participate very and it both. which later Well, March the I one be is one in ensure therapy and answer the a fuel.So, that been really proposals for to XXnd.And deep out

it spot, answered of imagine, plays part our sweet the question. be can to particularly you I intend it to As it. of enrichment and part hope right we I your

ask margin of kind of purchase margins the more the I are sort you forward? contracts changes Yes. if Do dynamics do And prices What of point. guess, the going at margins, I this the could this one in purchase to the at see on where about at activity they're kind price any in stable or the in gross the point? stay expect you trend gross just

Okay.

So, you I'm that are about business? asking assuming LEU the

correct. Yes,

Okay.

I'm is the So rephrase going question to understand it. sure -- I to make

You're going asking forward? margins to affect current market how prices going the are

purchase Yes. contracted supply or prices buying you're material the or margins It's the market the really prices forward, material. about gross on prices either going or

Yes.

supply the on you probably material. as and other affect.On way supply way the of contracts, affects the is contracts it we them tied that sell we market parts and Both have one the the as have in the and in contract does hand, it know, well. way other of certain market So, the have type one sale we to which pricing affects a

the affected but Although work.So, I'm picture also sell paint prices how hand, affected by of of you material not able your trying is that to market. are kind I'm forward-looking to one provide supplied market guidance, on any at things by

you give can't specific enough I unfortunately, you here. forward-looking gave I any information but I statements So, hope

MKM. with Reagor Joseph Our ROTH question next from is

team. Amir to Welcome the

not answer to guidance a a get So, here we're maybe but question. that different I know going

bags without you were there that look quantifying you you revenue so XXXX that we additional were led contracts XXXX? kind of puts of of an how to of that in Just much and As XXXX there that contracts had the kind generated, idea that out contracts at the for And of that total be contracts number is? XXXX any added in have roll off your there. in will the were any

high Unfortunately, that and in sales.And consistently XXXX a number of of articulated out we've The to at going into so, is order either any to had or book for million have sales new trending for robust of those highlight of have for that over a ones it do Thanks multiple specifics detail, that we've would relates past, level type highlight would provide. as the question, the we one sales thing years. that I coming the that order don't get book, that we our order billion, we visibility we in through fact couldn't we how XXXX had Yes. with regards typically but would sales I the the also years, as And past. $X book $XXX next Joe. matriculate

And then margins. call, on on the question on we the asked prior about just

we contracts shown done locking or higher-margin been new that's good slight but that's some had be a expect? natural were and a is have of that up.So, expectation it think higher onetime but contracts all XXXX, margin you therefore, expected some can there there had that has margins, reset those off, a of you in in or hasn't XXXX if locked you there that And some roll demonstration were XXXX, it, is I to was I much that a that remember would been was that that, in decline kind can't guys had it option. really contracts historically, really and job decline,

anticipate and today. so as on perspective predominantly legacy-based still from we the you No, are as do terms and legacy-based to get would have I contract continue with referenced, those I noted, based of contracts customers upon we favorable contracts our books, market upon with conditions SWU and future.And are we the you specifically well Amir I that off margins, where higher-priced million we those will roll about as earlier, the note to in deferred touching as $XXX.X mean, revenue margin prices

reflects where favorable point, the would future conditions will market been and upon years. higher well market based still the ones legacy recent of margins sales also mechanisms exists anticipate So, that currently are curve those pricing to in on have year commodity see I well.So, as in that rolling as higher for that we current that, pricing some your as margins off the the

it ask I possible Is over? it turn question before to one additional

Yes, absolutely.

had historically, better they'd some of And it QX the would sales, the uranium to that that low expectation on a in the historically right? given fair the this prices lumpy be uranium So, in margins assume guys you run-up little be margin. very in fourth those than the quarter, is But quarter? were during

be yes. would That an assessment, accurate

[Operator Instructions]. would over With back the to conference to no closing further questions the like turn in queue, for I Lindsay remarks.

the Operator. XXXX. fourth Thank This full conclude will call investor for quarter you, our and year

you again quarter. called look forward to As always, with in. next our I want investors who to extend a thank you speaking to listeners online our and We

today's Thank conference. conclude will This you.

You you your participation. your thank may time, at and this disconnect for lines