Centrus Energy (LEU) 29 Oct 242024 Q3 Earnings call transcript

Greetings, and welcome to Centrus Energy Third Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Dan Leistikow, VP, Corporate Communications. Thank you.

begin. may You

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

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

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

news our later this available our on call X-Ks of our releases XX-Qs available be also this All and morning SEC including are of will XX-K, on filings, website. the replay A website. and Centrus

everyone this certain discuss of forward-looking that may including and considered be performance remind call may that about we on involves information risk Centrus. assumptions uncertainty, information like I'd future today the to

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

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

as of XXXX, written is time provided this expressed in today, information strictly the retransmission rebroadcast Centrus redistribution, accurate or the property Finally, unless any is without consent XX, of Energy. call forward-looking sensitive of prohibited. and October otherwise only the noted. today form call is of Centrus This Any transcription,

now Amir. And Thank you to for your turn the over I'll call participation.

those to the us of both and call listeners Dan, first and today, for you thank the joining on you, Thank time. everyone you long-time

effort international just of shut drive specifically, Tech of in shocks to multibillion-dollar energy has meeting Big historic needs are around are made enrich few And to to restore set domestic ago markets the to Our industry, are uranium, commitment creating down years process. nuclear investments. we America's as companies world, Centrus, the to restart. proud jobs supply momentum. thousands be the chain. to Reactors Centrus have the growing At conflicts making a leading ability our a nation's policymakers sense that a fuel and while

Turning to quarterly numbers. our

quarter have due fluctuation there is our contracts take of quantity the our given business, of don't delivery customers year, at to the and results. lot of of nature annual quarter each multiyear calls year. our the price that to stressed generally choose We which on a a these a every where to the segment revenue from in have our delivery consistently but they quarter-to-quarter Most given take LEU comes choose same

believe fall are down we and and from our annual Revenues such, how a lower-priced deliveries whether margins contracts. higher-priced up our our more quarter And go happen many as those to of indicative deliveries into on or and come depending contracts results progress. particular our

the numbers. normal million. In a quarter, on company a on more is why in with a a in million coming for $XX.X third the $X is net internal achieved expectations That our of particularly revenue, and line quarter $X.X of gross loss we million of after XXXX, as and variation for focus quarter we industry. and this second big us, an put are as What's is Again, however, our annual we trajectory result. it's the important, even profit

HALEU Western the process the enrichment. aimed is pair Uranium and a occurs began HALEU operating or production is Energy you of this Low-Enriched production month, a in that HALEU well facility the for world. selected in HALEU the secondary Centrus As I awards pleased as expanded of am which after report Department as that HALEU at production High-Assay of licensed year, production Piketon, know, Centrus only last of earlier which in to demonstrating Ohio, deconversion, step

ceiling million. of The which contract cumulative contract covers a for award X is the production has for $XXX is orders could all cumulative HALEU deconversion of The eligible $X under The our the $X.X period underpin is department, for a awardees selected. for capacity guarantees a us only billion, Piketon. total ceilings selection significant future awardees XX-year X which has but million for initial task it department and each makes expansion contract in

The Energy dollar issued depend Department the scale awards under to amount ultimate quarters, supported U.S. Centrus with these subsequently potential associated and contract. of the will past the expansion by of the upon

task the will appropriations. ceilings, of limited the be In the total value addition to availability by quarters the contract of

LEU by enrichment been been Fortunately, and to has yet than production, by as are the appropriated HALEU billion RFPs not deconversion covering $X.X has Congress backed date. third more awarded, which RFP a as well that

aimed to We in proposal establish our production September hope facility large-scale will RFP with The expanded coupled investment would a partnership responded and HALEU seeking LEU capability. HALEU deconversion investment are alongside federal at LEU capacity. at form to enrichment uranium the robust production a offtake for what restoring a of be private we we domestic public-private new with and Ohio the basis commercial commitments, the

uranium technology, American a in we workforce only And chain. supply one American the are the the only and with world. company As enrichment reminder, publicly-traded an American

competitors of entities. enrich foreign today our All that government-owned uranium are

deployment of support commitments creating capacity production As another step have our approximately we public-private to LEU $X secured towards customer a partnership, billion of total Piketon. new a in cumulative in

the new demonstrates final signing securing new appetite subject for technical competitiveness. American us are are believe capabilities private build a strong and agreements We reflects confidence contracts in and upon this production to public and necessary to Centrus' and commercial capacity. customer contingent LEU These investment

added the chain technology to power Our to has nuclear turned systems of last on the efforts companies major in the data months, AI centers and few urgency future. the as particularly to nuclear restore America's supply fuel taken

after a enable finalized in the Palisades restart ever power signed plant represent the XX-year nuclear agreement down. first reactors These in to recently also Microsoft example, the closing Department reactor package the restart For And restart of of to the the financial to Michigan. Energy purchase Pennsylvania.

reactor HALEU-fueled HALEU-fueled megawatts. potential Two with XXX projects day, XX, deployments at in Kairos On made of its announced by Virginia. of days deploy fleet a of announced small Washington reactors. to increased Amazon Clinch totaling and support River million State of a follows reactors to in the million later, investment help deploy Energy TVA, a $XXX well million as in modular which $XXX as X-Energy's October Department same Google small partnership action reactors a reactors commitment the to to available Tennessee. That X That modular develop site $XXX to commitment Power

nuclear military security. The looking also U.S. for is energy to national

Pentagon an microreactor Laboratory. will to begin bids the reactor the recently is Navy The U.S. Maryland, Army National Air microreactor Idaho Carolina. the at is bases, in evaluating Alaska. began reactors year, of and Meanwhile, Next sites its U.S. looking deployment Force prototype, underutilized testing X Virginia for host a North possible on in HALEU-fueled and exploring to

all sites world's LEU. Given our to the LEU They production for largest Sachs Stanley require this capacity only Morgan mix common. for all XX America, a Centrus expand of to XXXX. momentum, in have site both, the These support fuel. energy from HALEU positioned by comes HALEU committed well growth is including of of reactor U.S. license something of nuclear X no initiatives by plant licensed Bank since is Ohio and or Where nuclear and of tripling one only a or the powered it's that in banks, surprise September, Goldman of

walk the now Kevin turn the to will call I through numbers. to over

Amir. you, Thank everyone. morning, Good

Our deliveries. for upon our in financial and results remain the based with internal customer line quarter projections orders

. The a third quarter of higher decrease unit sales a XXXX quantities delivered XX% price. than but more reflected in SWU

the nature believe annual we loss quarter of $X.X noted, the to We prior $X.X the more We Amir As a generated prior our our million $X of provide cycles. the results in year. accurate our million generated to in $XX.X an million of of year. income reflection contract to business million compared net revenue, compared net of due a same increase in

million a SWU Our of increase a decrease of average generated partially volume by the same offset SWU sold of the in LEU sold. $X.X revenue, compared to XXXX, reflecting price quarter million in in the $XX.X in an decrease business

decrease decreased average We LEU XXXX. million XXXX gross quarter $XX.X to million profit an the quarter from by by $X.X LEU an of quarter the third cost. -- the offset a of increase Our $XX.X ended third in sales partially compared sales million cost to with in in in of to $XX.X in due SWU XXXX in of volume, million

compared $X.X Our segment versus which to million quarter sales million an $X.X $XX.X an the quarterly prior gross in Solutions the profit, year. in was the year. third slight million in XXXX to million million Solutions was prior On of in $XX.X from a a Technical generated decrease $X.X XXXX. million, of increase compared increase of of also improvement our million million of Technical profit was which gross third $X.X reported of consolidated basis, $XX.X $XX.X and generated cost the quarter an revenue,

basis transition incentive model a reflect of a on contract Phase HALEU under Our cost-plus results the model from share to Phase a cost fee X. X under year-over-year operation

$X bolsters we to Amir As Piketon, partnership, deployment in customer a total mentioned, of public-private the support step cumulative towards backlog. have production creating company's in secured LEU another a capacity billion total previously of as which approximately commitments new

of XX, to billion. extends company which September of total backlog, As XXXX the XXXX, $X.X a has

definitive private commitments the $X long-term fixed entering as to XX, of potential also production under backlog includes segment facility. commitments and in with in support contingent and a billion our LEU sales primarily the future capacity well investment. depend contingent deliveries, approximately LEU into September commitments SWU of as on Piketon, at subject substantial billion XXXX, LEU public Our uranium ability Ohio to agreements secure $X.X LEU of and sales as construction is and medium- contracts The

segment. on to our Technical Moving Solutions

amounts, expenses, operation cash Our for balance $XX.X continued contributed $X.X ATM XX, we options company's restricted quarter leverage related total of includes In raising of relate proceeds, amounts our balance in as backlog XXXX, of gross total additional million $XX.X program, margin of $X.X cash. unexercised of and cash to quarter contract. a funded ending of an $XXX.X to net third restricted September bringing our million the XXXX, year-end the The in a $XXX.X the million These million. is HALEU options. to billion generated and proceeds proceeds million to which the cash of and approximately third unfunded our and

as strategic obligations well long-term in of Maintaining a facilitate investments our near-term cash future. strong continues contractual position execution to as our

million. the our have XXXX, delever to obligations by further $XX continue pension with quarter third financials our pension plan strategic reduced initiatives the through plans. We In of we associated

a As $XX of in September at XX, obligations plan remaining excess million we are level currently funding of pension XXX%. and XXXX, have in these

our part to company balance continue sheet the better cost risks The and execute adequately expanding opportunities position optimize on to strengthen part at to of an These will to are position capabilities initiatives a sheet. strategy structure, manage evaluate vision of multiyear in compromising a ability position broad as balance to a further to our enrich enrichment continue the company place its scale. effort ourselves our America's restore to uranium without to

With that, Amir. turn to me things back over let

the this large billion wins is competition, how for Congress has America's nuclear nuclear in Kevin. in from final Nothing to as of Thanks, to but see fuel with share us competitors guaranteed our what supply a and hope I'd believe make. RFP a strong role to we sets to our on domestic thought set we we apart like aside build secure have we fuel a production. that close and our seek recent case about $X.X chain

American and American an an We today. chain are American that supply workforce enriches company the technology using only uranium an with

. All today enrichers of the enterprises. foreign are government-owned other active

manufactured The Importing domestic other the on chain the We policymakers Netherlands. the the overseas. we workers. European machines U.S. does the actually manufacturing supply them, also chain those are United virtually all centrifuges centrifuges Capitol exclusively Hill every It September, in is not supply our an manufactures change to which the company technology in operational American and American one available for employing our is includes only manufacturing In the that that jobs design. fact the only of and the XX held suppliers, major are unveiled enricher briefing States. of

import of technology. centrifuge terms to technology allowing access agreement, the for of their Americans prohibit European the the Moreover, centrifuge

But So from be and European-owned Europe. American a and U.S. to tax is dependency an it should workers. afford the think companies enrichers government. to once-in-a-generation even time to be to nations is to suppliers. leadership cannot using the invest to allied additional from when comes by priority opportunity dollars, American our in it. on shipped And built market nation installation supply overseen we by the are bring to has new great squander reclaim reduce American workers technology foreign companies U.S. in by now owned our This

deliver coming our us. possible. happy our I for none you We Let this time. to at journey thanking We're employees me be questions our results take whom would intend appreciate close to for and by investors this without nation. for with of you, this strong to

Operator?

question Brown Today's Instructions] of from Street is Lake [Operator Capital. first coming Rob

up Congratulations next of do on to wanted amount the timing out a And on you I in contracts next steps? see laid But steps. the progress. what's of next the the potentially? know how HALEU getting follow for and I kind just information. selection the of sort fair place you

for to the IDIQ first. specific which with everybody selected and gets of of start timing. million question Unfortunately, we'll know I'll up It's task at discretion your now, the $X do the total waiting which last Department for after Energy. we quarters. not would be Right awards,

amount task I unknown than And this no is to allocated lot be think that sooner and for make happen. when point, really hoping we're be obviously, later. timing motivated mean, may feel the of we So The that work that a later, will I be orders is to but next have be really There's step. sooner done. than everybody these it it will Rob. would to the at

understand. I Yes,

from be guess, happening you you the Okay. accelerated sources . do source, power how do maybe market view change but your in all that bigger prior as market and development, picture, does how of incremental demand as how the new overall things just I And that as on nuclear And view and views? then particular, you? there these for now view an HALEU, come

strengthens We of Obviously, and this proposition, all case market. favorably. our strengthens view value it importantly, business very our unique that our this in strengthens more positioning the

that? times by of before, whether would richer restarted, of and capacity to LEU is mean them I some or be multiple to as are fairly it's we SMR, reactors And the advanced whether reactors the there. foreign be Regardless built, going of matter do need many what of limited, what's all Now only HALEU. enrichment, going or out it's mentioned there's enrichment

Chinese are which one them one is are with is and of Centrus, Western U.S. There and Two technology, that Russians. X, including U.S. Centrus.

build be of of the followed that the number reactors, will of the of restart or regardless much all and and our reinforcement demand through creates the enrichers case. stronger So a same business

you players high-tech or have welcome very and like for offtake us, of power. either all in So news particularly is this investing when committing the large jumping direct to

for the chain. the critical of flow for is that of rest think I investments the supply

of [Operator question Instructions] Capital The next is coming from Partners. Reagor ROTH Joseph .

contracts. one, I guess on the first just

Just structure HALEU touched this that would you . those contract to Kevin of current cost confirm, X I fixed in think the like or bit. cost be likely versus Is the on The correct? the were just the share plus. a awarded, that's kind that

Joe. question, the for Thanks Yes.

reimbursable, one even going see of I award as akin fixed contract price, think cost at in the We something to the this the to fixed multitude designed types. cost they for the of Energy of reimbursable. way contract this, flexibility point, a [ form these instrument or Department cost has share, the IDIQ award in eligible a of we're been T&M leaves believe types, ] as price it to it is

discretion they of think I a mechanisms. think of are I the multitude be like actually build-out a likely to that the of I and of most could But those at going Energy it nature. be individual task do those ultimately through, this to as . is of said, types the for this applicable would they Department orders how contracts issue

years, that really tend good looking have starting last timing you years I a segment high-margin quite years and at the be that but somewhat compared to the so lower you to those books down. the you being to be of there are but and back to last margin, know of down signed seems roll even that, contracts for -- year, bit some a all are reflection years are the a know tend guys been kind to and of of odd few margins over be of newer then And the had you margin, contracts, a Okay. LEU contracts back they've off year-to-date, lower rolling guys lower? look if the that couple that rolling Is

of think somewhat I statement. that's an accurate

XXXX. into SWU and contracts since have We entered up curve the down

see you we tell our in had This balance is some what during quarter, balances. majority in market contracts seeing some And time that the you're signed at contracts our as its the the the can the from that deferred lowest. that revenue where in what from revenue deferred was that were of in landed the our to with year the where we that is that profits revenues margins at of quarter we already of point related current this

to on right our it the key were And within were broker call that in curve. remind at about of time everybody at in point But have now backlog a contracts and we a we the is many pricing to million point $XXX signed those where trader commodity business. higher related

we occur. that look see the how deliveries the call, the are as a at are margins will basis. go-forward the certainly, those crafted as solid still determinant to Amir But and contracts the and margins the be will when taken So when anticipate onset way of we on actually deliveries noted,

next coming Riley. Pfingst question The is Ryan of from B.

those commitments, they're For geographically the you new whether customers, could potential contingent those maybe customer or share it's where anything customers, LEU about sales type located?

be to an the world. is selected largest a contingent announcement nuclear the a great was operating of that with come be to honor which finalize agreement did had agreement. utilities able to obviously and We It in that we public one out with KHNP,

of by we customers. of the here, be unable could you no what we're would reveal safe are you use nondisclosure, talking that as Beyond nature uranium, enriched that, obviously. those agreements, under it our surmise But reactors be to of know, for the that to covered identities LEU, most

these their utilities that And reactors. to operating are all are so require and power LEU

So of we're that our now LEU this This market is present satisfied capability our is can a market. already. be facility is a buildup existing market. licensed with the which in This for

And Ryan. the hope question, answers so that I

confirm, Got just to it. And Amir.

had announcement sales, contingent $X.X that billion. September, you in in with today, So billion $X

does imply correct? $XXX additional million, that an So

Correct.

I think the is on. math right

Looking Kevin. at

you then the to Appreciate expect funding? it. and as my for of Piketon. that. out the all build Does in on XX alongside affect just at production confirm, online that first And or appropriate Got at both you guess them second expected receiving time line so LEU do if dependent HALEU HALEU I the for production, cascade to or bring months question,

is I I from get thoughtfully on proper answered team. to have That question. want and sure make just good backing our to to one the you a Probably back this it

Just around some you aligns of and yes, reaction back what what my would I is not you're from on asking side everything going the change to is earlier both question, initial the kind it your is depend it that get the in anything if of guess timing. we'll HALEU to that's certainly, projections on we that's if that. is, months. and XX I'm reading provided LEU

we Joseph turn from actually, time, is to like I'm At Capital. sorry, -- have it question. another Joe, would do It this ROTH of I Reagor over back coming

follow-up after one had just effect. I

renewal? Or On contract get next an for cost is up the to still contract, on plus. guys it. HALEU Just current to year? you continue update expecting Are that's that that

Yes. the question, Thanks for Joe.

regards DOE the that after note are that we in option Phase was of it had and that the back X, November, in ends working expires we in we're periods should have and I to November. with performance aligned the currently Phase extend and contract schedule we period that contract with And November. delivery to X, in currently So within X-year

we ends in formal the XX/XX, have ends but that the on X-year so mid-November. And XXXX, contract period

floor At to I the would Leistikow this comments. time, like back . for Mr. turn to over closing

This third operator. concludes Thank call of XXXX. for you, the quarter our investor

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

concludes this today's gentlemen, and Ladies event.

of may your time, disconnect the webcast log at off enjoy day. You the lines rest or and your this