Centrus Energy (LEU) 8 May 242024 Q1 Earnings call transcript

Greetings, welcome to Centrus Energy First Quarter 2024 Earnings Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Dan Leistikow, Vice President, Corporate Communications. Thank you.

begin. may You

Chief you the Thank ended joining Today, President us. XX. our Kevin Good Financial Chief for all the cover Officer. and Vexler, Amir results we XXXX Officer; first we'll and Today, Harrill, morning. have for Executive quarter March of

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

the for today. report quarter our on later file to expect XX-Q first Form We

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

Our from actual those results statements. forward-looking may in our differ materially

concerning and XX-Q. information our from actual is results statements forward-looking filings could factors on reports Form in cause differ our our in on XX-K report the contained SEC, those annual with to including quarterly Form materially that Additional

of written over participation. rebroadcast is any And or expressed call turn without Any prohibited. consent Finally, now redistribution, only otherwise May Energy. sensitive X, the Vexler. property retransmission information noted. to the today Centrus in Thank of XXXX, This and the transcription, forward-looking as is Centrus the for time of unless I'll provided call strictly the Amir accurate of today, you call your is form

million. today. million profit everyone first revenue, to million in In $X.X net the $XX.X gross we Thank you, quarter, Dan, and you a of in on $X.X loss total achieved and the thank call

said our an of is are times structured. than look we our basis way As to annual contracts because the best before, on way at the many rather have business quarterly

to that contracts we for the long-term of is have year. given generally quantity each customers commit delivery, multiyear fuel revenue. a quarter pay when them LEU Our take which which to decide book They

enrichment, on Another factor is depending are leading over the varied when signed. pricing significantly to price last years, with they contracts market different the several which has of

for our XX The in In HALEU. quarter a the Centrus historic the of with of announced fewer Energy. Ohio, deliveries was and make fact So it of this have we achieved Congress priced low X or investment in to year. generation rest efforts when embarked dollars tend of with kilograms Department first for of facility in period at high-assay of applied is fuel contracts, awarded next advanced we our November, high the first production millions Having needed sales, those component uranium HALEU low-enriched reactor. nuclear and approved a of lower assay, new saw quarter uranium we in hundreds up that, productive the said of production U.S. advance contract on funding which Last delivery Phase competitively year, enriched Centrus, a we in first-of-a-kind a Piketon, our of and of an enrichment. the under the incredibly new booked uranium, milestones to for

on is impact adverse fee don't material cost-plus cylinders to the Since and financial have a continues the As HALEU us to been has interruptions obligations amount our receiving to we've incentive getting as the in enough an time experience we compensating our HALEU. We for earnings in limited cylinders production contract continuous the meet last on call, basis. to produce able we're that storage department discussed department Centrus. on continuing the under since of us expect been the difficulties of HALEU the

will cylinders that as we expect to now be of make I cylinders been storage later announce this fill that resolved the an to be ongoing am deliveries cumulative department. get with chain kilograms the about and We've have after reached and we continue continuing XXX issue happy to We that. sometime the them year won't supply additional issues to production.

President restore highlighted that the production United that fuel encouraged for our depended too are Biden long has and States this to We investment HALEU capacity uranium scale. enrichment proud multibillion the President express The be the is here also also speech. effort successful dollar imported recent commitment noted in Centrus a the on U.S. at in to to enrich uranium America's leading making to domestic

technology enricher. are only U.S. We American-owned the

rely fuses our in the center We only workers who are and supply chain. States. the American United enricher on We manufactures U.S. the

Our X those of is and HALEU low to is that the place in only It uranium in is the Ohio Western just for of sites for the licensed production. produce reactors States license one plant the sites enriched is United existing only American-owned. X world that

We scratched in possible surface what's have barely the Piketon. of

as Pentagon for thousands room large of center futures. the Our facility with as is

supplying is year. in very internationally the annually currently billion we the to generation of also $X.X accessible HALEU about large billion addition The The to the fleet about today's enrich supply could for existing at reactors. produce of market date. is is uranium worth LEU reactors, to opportunity $X.X an for market per United The States In have prices. enrichment low next and component

the Since contracts. clear, the enrichment and origin and those producer. playing up designed uniquely public world robust is field It require U.S. production the that similar Every production state-owned backs as To at commercial security are is be of of Department we investment to or from in to take towards of proposals scaling federal taking their in been needs. U.S. the RFPs the HALEU built will enrichment on and is deployment partnership. will kind the LEU, private critical that government A private an government. this ready. a quarter, significant good has plant investment supporting technology, of U.S. in a purchases. response either program missions partnership. other news American HALEU is The building offtake for robust We steps alongside only that via Energy to capital X of are In enrichment stimulate leveling a scale technology of use we require positioned also a submitted national Centrus partnerships to part meet have federal

to President looking in cost that and are waiver LEU look and positioned on $X.X to forward runs department's and all allow additional provided of about it forward it will to be which a did on President, Republicans this and has XX. billion well milling either time but that different uranium, XXXX it to appropriations RFPs jumpstart uranium, We decision come the restriction for part awards, available the allows later as days domestic or enriching enrichment HALEU. with for it $X.X new so. to Russian Congress to effective are to becomes bond an hexafluoride bill mining after soon as April the converting overwhelming department believe capacity Congress of Act. production Inflation funding imports signature, million to would long-term and both competing and signed from to XX some it made funding we $XXX placing We legislation The year. deconverting The new uranium forms. the additional The Reduction the process President's initial this Congress and for passed in billion funding And the to do online. include The up band contemplate March, support the which as in the of contingent Democrats, of

the process. predictable policymakers best not implement side the waiver with Prompt approvals U.S. and entire We've an efficient public to engaging Centrus industry. public are waiver private but is talked of critical to the nuclear how on partnership. of this We about only

States and our hold going Subject reduce support to up. sector a traded am the is opportunity it definitive the of private to America's sector last to part the LEU fuel United nuclear licenses has that to large enrichment a and company pleased ready With and do to as to is capacity. chain. production of to build private we side? million the effort reflect to and that its publicly to And our Kevin. both to and nuclear contingent supply return LEU. in I'm fuel. turn contracts, the are commitments on investment part and only new HALEU to LEU. to company months, only secured our customer can stepping the shows conditional Now, critical things HALEU tremendous market approximately about few American I produce the Between private sufficient over over dependence competition in announce They again, marketplace of the address LEU, Russian to what restore support a a greater that, Centrus industry necessary commitments result of as the LEU the sales producer $XXX upon Centrus public bring signing private Here securing that these to national effort to see enrichment base

Thank you, morning, Amir. everyone. Good

are quarter deliveries. first orders XXXX on this Our with line in of projections customer and our internal results quarter based for

also percentage X a at first the smaller has over consistent are lower results years, quarter's which with reported This past quarter's margins. the of included deliveries annual

not X repeat included delivery of later first a did first expect the year. delivery XXXX, higher although Additionally, we of that in quarter the in the margin XXXX similar quarter

both same SWU of of million For generated decrease business a of price our LEU to decreases sold. compared XXXX, SWU average in quarter quarter XXXX, well as volume the of sold as the $XX.X the reflecting in revenue, first in million $XX.X the

profit of again, from first partially gross sales revenue the in the the the XXXX million year. In in quarter last margin million Solutions a segment, volume, with was XXXX. decrease gross ended in million. We first from in in cost million We gross XXXX, of million a of $X.X million, a quarter decrease first a consolidated of million compared to $XX.X from SWU in million quarter quarter of improvement $X.X unit quarter year. of same to profit reflecting $XX.X by cost for on $X.X the $XX LEU million an gross partially Our of LEU sales our $X.X $XX.X to first compared $X.X quarter offset the of last the decreased to the cost decrease revenue by in quarter $XX.X compares increase basis, same million our of $XX.X Technical generated profit million we The the modest cost sales in in the the of of sold. sales XXXX. That was LEU with Solutions, average offset of against Technical in --

cash. and As Amir incentive of transition operation to HALEU restricted X million contract ended noted total earlier, we the $XXX.X and that segment. in with improved of an to balance model, additional Phase for have that million cash of of and $XX.X a a which a profitability We has improved cash million of the fee $XXX.X quarter transitioned cost-plus with the restricted cash

Our and continued strong us things me turn future. cash enable With Amir. obligations position our to make strategic to let back over in operational manage our to that, investments

Thank you.

we is a and have of clean just desalinating year, our I policymakers new HALEU-fueled HALEU Covid last capacity are the potential a making industrial next test in needed U.S. Russia's years to than market of to reactors triple enjoyed energy, come whole chains. the Before allies troops The countries invasion, market dozen prices surging to importance and bases. get vast concerns and a never or And to your the these fuel meet technological microreactor provide more on prototype generation the and with spent nuclear this meet to the want are to by a be context to systems. The them require States with more about is of cement it supply like causing high needed new will warning fuel a pledge for I've generation new for continents committing for offered to United up. catch use to provide and bit a heat stark our will Google over sparked exploring the or temperature X energy AI deploying of the X will change power enrichment them Microsoft subsequent about XX offer a of pandemic changing as in. Meanwhile, need electricity. They market reactors data the as for processes market. enrichment nuclear nuclear a military centers XX/X industry. in steel to now race I've Many the will triple. environment declaration as seen XXXX, and than realities a to the of coming and for to new dominance we Ukraine water. in needs a geopolitical closest support goal. questions, lot term new the Recognizing military dramatically to joined year, a with industry that

a reclaim generation As a others. It a company have the enrichment. we without American It's mistake game, as in in was time but get a States it in to market and you. we United us to leadership this for a for once country, uranium do opportunity to can to back see

So investors who my to journey. gratitude our are let us me close expressing this by on supporting

We expect With to happy your accomplish questions. take great that, to things Operator? together. we're

[Operator Instructions].

question first Street Lake with from is Our Rob Brown Capital.

market little entails Rob, what million and of [Indiscernible] sort have of of for more that LEU color a kind that share? and $XXX if the continued on means what the you commitments

glad I'm question. as you first actually posed that Well, your

-- important obviously. from most way in for different it's it's a our our I think actually today. the is things this And Piketon. meant of in is production that's the This from orders, facility in different discussion past probably one it,

these by is be So are material that this us. will LEU, produced

seeking as materialization public of contingent, have it's obviously, upon everybody we on the that been several factors. prepping as actual are private facility. past, the a in it's Now build is and probably and partnership, biggest said, the factor an we contingent contingent of we the And

So the and that market, the commercial seeking utilities another fairly the in really aggressively this be to correctly and Centrus is way read looking that to the competitor. they're are to competitor market

really very what news a indicator to market And forward, producer do the accomplish as a do step and set it we to a become very so, we're view from huge positive here, good

do through point? do of process? question exactly. second to RFP Yes, billion, really see that playing $X.X on ban how is And separate start you there's incentive, the I kind know when perfect. That the moving some forward then steps was here. Or out that this gets the then HALEU out the play and move pieces how that Russian a But at

Yes.

federal investment we earlier on be been community place, has it's think of billion We've order communicated the to unlocked, the as be investment prepped I for which Russia ban kind in -- it So put was. for that the in well. to $X.X that

which DOE amount be in funding is very so, the a that unlocks really Centrus to significant industry, the positioned And a to is well of this. going to flow and player through major

positions funding stand predominantly enrich chain supply in we've to we is our intent the with fuel, October Russia. up in billion. that the said, And $X.X successful the others, a for for supply where think this for know, I billion you as demonstration demonstrated As in seeded extremely fuel well to our that chain to supply for competition a I us $X.X ability to here chain reliable

to how the going really Now be it's manner? point would it Nobody in knows be what at decision. DOE this divided

is question Riley B. from Rygel next Our Alex with Securities.

sure. times locking Exciting here, for on,

here. question First

for of that early you is As these ban, into or how need it relates who's your customers? line any the Sort to time applying there? insight importation And uranium for waiver the urgent enrichment waivers waivers? the and the process and nor or the

the contract been uranium supply waiver. reason delivered the effect waiver this cutoff nuclear that to is supply of is financials. why source that adverse customers. clear our would for would filings a in to U.S. be industry, to we Not us, enriched entire very Cenex a material is absent have our I immediate on mean, disruptive our the provision an of Well, the and We've extremely and only it there a a largest low business

waiver working with stakeholders should providing should right the to and providing the work. to input few We have and process past been we how industry how as input it be For months, and groups the we for opportunity. line apply is first the really, bottom a to for the at that intentions the that international the all case in interest. believe strong And have waivers here very obviously is

in the question, your to going it extremely yes, but not of So process, Centrus, only preparing. industry to been this to and make to here We're answer is we've U.S. important, the use

what it And kind to stream is the cylinders, your DOE of year HALEU, you supplying time anticipate meet will the production? with yet relates consistent -- production not current you that about supply do then here, of as cylinders the of a have your you of

Right, right.

situation these a on progress reported that on it's calls So we as and we well. monitor

so, temporary. cylinders And XB the that the in obtaining is delays Centrus anticipates

We when really, sight And be have available. fall. cylinder consistently a more we be to the line the of problem to resolved this should expect fully

again, So, temporary it's a issue.

this Now supply fall. chain that fully the we is be to up, resolved expect it picking

Rager question ROTH MKM. next Joseph with Our is from

question. the for you taking Thank

So question kind the waivers. of about on the following

You a would guys fully any time had investors an will during to that would would if it like was hypothetically, you that, period a of be canceled? adverse Or you from without in open of to contracts a have effect. would the that which there But waiver, kind mean market? standpoint said understand it the combination mean be of buy would it thereof? that deliver that have Or have

been President Well, who I it's the something technicality, before a not I news in into do really that want front following it's are just for it's make really first, to in signature. that is of implemented in happen question, to not place before folks I the yet. not mean ban mean but clear just I case -- just expect dive we answering has the the

that's -- point. just one So

we here team In our been waiver. our the working lot I on even a contracts terms decencies is are not that. of working suppliers. our really we this our of are recourse reflect as our we've will really a ,but I we and job working with working have, leadership together how get structured mean beyond into customers, contingencies things with details contractual beyond plans on contingency and been There's on are what that have that

any then guys requests want don't soon over, -- they they the in that's customers a your for get in to Okay. because don't XX-day that, signed starts. want have deliveries how let's window with where seen beyond would like complicated. from deal to And you uptick it's say, complication, Fair. When the have

yes, delivery in So seen saying, issue? have to before any then want take you our weeks becomes few the and last uptick we an this

No.

a We you have not seen period time that quoted, no. that in

is Okay. given you you facility impact U.K. I giving do or the One, build that how And GBP different given HALEU your guys size if mentioned LEU, an government produce million out? completely Urenco to facility, giving that you you saw ally towards is a a a potentially guys XXX then of producing it guys, the facility, that also any completely they're money? has U.K. in that then the it's And the think positive you approximately much went from if topic. built on you it -- could

Multipart Okay. question.

first answer me one morning. the this the Let announcement relating to

here, one further competitors reinforcement -- yes, competitors. a by state-owned U.K. is we of to are of So that award source and have it's sole our the government our

the that I'd Now, what what implications are to point enriching one, Well, to Centrus. we're implications number like to -- already HALEU. out

of are that stepping folks are this into ahead just We now. far

designing, path. we're licensing, along we're So further building, that talking about installing much

the here dollars and me, government I that is stepping market. cards read the into way of HALEU to of millions Now in you the that's have hundreds putting a

commercial is the will that require of advanced reactors this not just beyond belief advanced that a a I reality. The think government even the is to this HALEU, positive and the phantom the reactors need. is strong U.K. there sign the community a are up just

signal. So this very a is to me, positive

believe are anything that that, -- And already comments. we ahead enriching there's else the because competition are we would not of beyond sure I said, I As I'm HALEU. we're

capacity? LEU the part And about second

Yes.

I the you part trying the So of to reminding second -- thank remember. for me question. was

the really million about are our existing and you're it in the thinking a license. building building how if and existing we so large estimating $X.X So is,

So that's quite a bit.

million? annual on basis, that's an And $X.X

Correct.

[Operator Instructions].

are will There over to the pause moment a any if see remarks. to We there's for back to closing no questions this for further conference brief at like further I would Dan questions. time. turn

investor first the operator. for This XXXX. conclude will our call you, quarter Thank of

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

conference. Thank you. This will conclude today's

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