LEU - Earnings call 3 2021 | Centrus Energy Corp.

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Operator

Greetings, and welcome to Centrus Energy Third Quarter 2021 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Leistikow, Vice President, Corporate Communications. Thank you.

You may begin.

Dan Leistikow

morning. Good for all us. joining you Thank cover Today's quarter for third results XXXX call ended will of September the the XX. Financial Officer Today, we John Strawbridge, Chief Philip Chief Dorrian, Executive Chief have Dan Accounting Poneman, Senior President Controller and Vice Officer. well Treasurer; as and and Chief Officer; Officer, as Administrative President,

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

expect quarterly tomorrow We our afternoon. XX-Q file on Form to report

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

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

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

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

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

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

Daniel Poneman

and debt which keep today, to country sacrifice gratitude and and I'd safe thank all of they strongly November everyone nation to a owe it's may and something that our over we the like secure, of the all that especially honor wherever veterans be. all Americans the to and made acknowledge, us call is contributions and the day to today. Dan, you, they've you a Thank XX, our veterans, celebrate to on

Godspeed all. So to

I'm profitable of Energy XXXX. had a for income pleased and total Centrus revenue million quarter. to $XX.X earned million strong of net quarter the generated $XX.X third and report that We of

was balance us strong September million, $XXX forward. position cash as a we as Our go of in XX putting

to reflects only lock deliver a the well segment success and the late and extend we've on perform not in fact were diversify years very of but sales enrichment also margins. our affordable prices This able base continues through and had strong low historically ago LEU supply Our that we XXXXs. supply to take advantage to the few enrichment side,

the effect at market-based beginning costs largest XXXX, of reset and supply recall, may improved that price you margins. took our [ a our As ] significantly in reduced our

While the the in with uranium our recovering point rising costs price XX% lower, enrichment low steadily market for XXXX. has indicators compared published enrichment to of August are been

new steadily maintain is been which $XXX sales strength of to and currently the through long-term valued the winning in customers. million for revenue We've of including approximately $X from decade end enrichment, the our uranium sales order in billion advances at deferred book

schedule. or been additional completed finished [ centrifuges to contract efforts completed the and most fleet well the meaning in are support with Energy, of ahead we have for pioneer of existing reactor advanced the it, or nuclear generation used of the construction as quarter, the will of the call We We HALEU, production Department that we that this good contract X our under assembling our for next-generation plant the also underway. needed reactors. made X low-enriched also fuel the in currently systems be designs milestones of ] and HALEU high-assay, in of milestones development U.S. be have progress uranium a is X-year of may have on XX Under

our of first approval facility secured Nuclear we June, only in by and in Ohio, Commission application licensed plant the U.S. license recall, from NRC Centrifuge Piketon, the Regulatory the the American U.S. amendment produce may HALEU. enrichment making you As to

We to restoration leadership. nuclear achieved American road on the to critical are the of milestone have proud this

While work delays on have as The the challenges of keep construction track some has significant has and created [ ], we our vendors higher include to throughout managed own pandemic, us has Centrus which affected pandemic noted, the costs. COVID-related previously increased challenges. from

go are forward. impacts with and these increases as working the department to to minimize the We address cost we

our will scale production agreements, We year. to be cascade ready plant. funding demonstrating begin is and/or availability expect At of next completed and the point, to up to the that the HALEU goal that offtake centrifuge subject

While demand whatever can level the market accommodate large on customers, of initial is to potential [indiscernible] Piketon support. capacity will dependent the signals enough be the production modest facility and

U.S. As enriched to in enriched various The a satisfy. XX% Long-standing policy for existing we [indiscernible] to the and agreements uranium addition look to ] XXXX. commercial support of XXXXs for to enrichment requirements longer X% the for uranium government advanced missions. to term, content requirements of between technologies positioned is U.S. technology-based U.S. national both levels uranium-XXX shut down in was Centrus plant fuel that there also reactors, are number the and and last in enrichment security and prohibit foreign use [ and built

today. that lacks country's Cold only technology is can to Centrus' requirements now, but to needed. United a since time domestic down of States stockpile used enrichment highly way enrichment over the the will finite capability War, left XXXX, new requirements be those meet [indiscernible] For from first only be the deployment-ready can capability draw For any the the ultimately, that technology centrifuge the is these domestic AC-XXXM enriched uranium meet

our resuming pioneering quarter measured fuels. progress ] [ profit nuclear steady Centrus, an said, revenue and by I also towards for enricher market as for the as strong but not another advanced and a are was status only we making this As by our

on Now turn details the results, Philip? to call the quarterly for Philip. more financial will I over

Philip Strawbridge

everyone. Thank you, Dan. Good morning,

million of in certain benefits Revenue quarter million. pension with the GDP. and settlement the the claims company's net to Portsmouth contract of past quarter third $XX.X in for mentioned, we and a of revenue XXXX, current million the at cost had related postretirement included for the performed $XX.X for connection profit the reimbursement reimbursable total Dan achieved incurred of $XX.X As

the in same LEU XXXX. $XX.X segment from the Revenue to quarter compared increased million

in increased was Gross $X.X in cost, decreases cost $X.X million in increases in sales million partially price. offset of higher in Our $XX.X SWU increases unit sales SWU average primarily the in and period, the average third SWU and to to SWU million cost. the period sales profit the volume X-month X-month the LEU partially sales the quarter compared by unit average decreases reflecting decreases the largely year, by offset in due last for segment SWU volume, in

a typically what obligation. said commitment takes record customers that that's quarter the customer LEU know lot Those of our segment, have customer's the participated have you vary our a month, represents that we their contract. these the include our that annual decides revenue, calls but most. margins and quarter-to-quarter, which for revenues annual that In contracts quarterly matters multiyear in the obligation, purchase who purchase that but it's majority from an purchase our The revenue before not annual we've performance the of and in

because have others fewer look Some deliveries. while quarters better look more because worse deliveries, we we have

were of were others are high lower. today, or when variation that than the some and prices Another higher source contracts fact is were they signing when were prices signed

or look can we're worse quarter of delivering a upon the particular So for that quarter. depending contract points better price the that

in solutions compared technical in $XX.X XXXX. to the same the Our by of XXXX segment period increased as revenue million third quarter

of segment to increase revenue X Costs previously, months mentioned postretirement corresponding benefit in million XXXX, reflecting company's increased related I As $X.X quarter claims reimbursable payment the the September onetime XXXX for the connection the in of included settlement in costs cost in for for work pension reimbursement past ended a XXXX the a of of million incurred certain compared contract $XX.X third with this largely period the to sales the contract. XX, performed. a in and

costs. bit talk going a little about to our SG&A I'm Now

ended increased price. me, a mostly which $X.X of Our mostly -- in X the result is higher total stock the $X.X of the of pardon million million XX, as expense which compensation SG&A in our result is incentive-based months result increase September a

$XXX,XXX period in XXXX. However, and X-month costs to period. for for increased the Consulting for $XXX,XXX ending the decreased the compared in quarter period September corresponding by SG&A XX, the decreased X-month $X.X million

we position the a in as good October, cash, that close. item note purchase million, won't November $XXX a launched As any the efforts continue to going of forward. sheet. quarter initiated offer a was ended XX, providing does up clean occurred strong that of we shares This far tender we our until was the subsequent the to further after detail balance to quarter us offer after tender remaining be in balance with of One not close until preferred. putting That so our

Dan. to going turn back I'm Now the over to call

Daniel Poneman

Thank you, Philip.

XXXX. questions, your was picture speak to comes of in the Department Energy launch to get feature A we it I'd of picture power prominent broader deployment XXXX carbon-free the the generation the to that of Before nuclear next by the when U.S. to those In Program. of to like plants. the support designs Demonstration expected XX to field of and multiyear multibillion-dollar require selected to are construction reactor a including designs Reactor scale funding. X for commercial awards by HALEU, Advanced X program, the X-energy HALEU XX of reactors that the TerraPower department

strong a U.S. projects which play This bipartisan the be Demonstration last over nuclear legislation, and XX, large and and for funding advanced of and nuclear to $X the President climate trillion X widespread Senate a likely will against approved a Reactor sign their both in the into provides this future X August billion near change. Friday XX country the to The investment reactor construction successful industry package in a the law by of role road and and was will Biden years the appropriation That support emissions momentum Advanced Program, on to the on critical to fight $X.X providing growing infrastructure the in is deployment. On House demonstration late in the clear XX. approved signed

Another February the the by vendor XXXX this plans United in could our Force a RFP to it in Alaska timetable a the XXXX, issue for effort a commercial operations selecting goal other contribute October The a late Force as Eielson procurement. major and being draft RFP, a larger military in XXXX. for microreactors outlined select occurred is final and when of to and by proposal, HALEU. construction enter the plans with lead potentially a Air XXXX, development demand deployment Air announced Base installations to and large deploy for in since in microreactor begin to Air successful, at the scale last to fall If request call a Force or States detailed site

which and sense And operator, of organizations, growing provide other that there Pele, we all to would Project the in This academia the HALEU be this prototype being and years. happy this The of urgency in solution to Office is effort [ to or questions addition underway called intend HALEU and goal. nongovernmental deploying is importance within separate source a our any X entertain is of our build Capabilities is microreactor of the mobile We that time. stakeholders upshot aims Strategic climate to of a consensus funded nation a industry, our growing that and need. about involving industry, at government, a domestic by ] X Pentagon's achieving field all

Operator

the [Operator from with comes Instructions] Brown line Rob Markets. Street Our Lake of question Capital first

Robert Brown

in the on and some placing that's is some trends business around on driving how in market the color First kind orders. of activity impacting Maybe of give SWU. and market terms the pricing of just your question uranium the

Daniel Poneman

side typically the than know, notice. is with as a a Rob, uranium the different in and let Well, of the on very underlying specific business advanced long-term our contracts lot are commodity a enrichment business you our trading basis on

one. So point it's not directly time,

as the the you the the that nature kind utilities of customer, the that know, enrichment it's uranium. of business two, Point is provide typically

So market. facing they that are the ones are aspect the of who

separate uranium there because effect algorithm, it's to there a which price, there's their kind work utilities some as in an makes however, et between it obviously, up cetera, point, as their attractive make goes more less et is [ own on [ ] ] cetera. of And fueling of decisions use is more to it, relationship more enrichment. requirements substitution use and uranium Third obviously

not So day-to-day does that activities. a really and algorithm affect highly one our complex

rising of but the not when uranium on interest importance, lot new overall, of A my of of well. investing the you market a secular time, in broader investments But in interest reactors, of part in -- quite look robust the advanced in the of trend I a growing only but not of set fleet. really of a kind a interest that over scene international mentioned is current natural extending nuclear, in in growing only basis, as a this country, recognition the in life on remarks lot

So a slightly answer, relationship. it's complex it's -- sorry, longer a of it's but kind

Operator

comes question the ROTH with Capital from next line Joseph Our of Partners. Reagor

Joseph Reagor

So quantitative for for can I important guidance, be commentary guys most based or give don't us next year know question -- guess, on qualitative I requirements what know you guidance you give my annual would expectations but any on are the deliveries? you

Daniel Poneman

a [ supplement line ]. time Well, to I would say thing I'll give

We I you what relatively don't Philip, know and to beyond increasing expect that, modest steady revenues in But add? margins. more wish

Philip Strawbridge

and know, give guidance you some and did we 'XX. Yes. 'XX gave year, last Joe, we for guidance as

is still segment. we expect what increase that to would slightly our from that to hold and guidance year-to-year said really guidance revenue what approximately that said, so And attributable was we that holds just true, LEU and same. the the Dan And margins perspective

still good. that's we So think

As on, sales. early Dan we've mentioned had good

So the we see market is very good. still that

hope So guidance. get we'll that we

Joseph Reagor

that right? onetime excludes And items,

Philip Strawbridge

That's correct, that's correct.

Operator

from of Gengaro line Stephen the with Our next question Instructions] [Operator Stifel. comes

Stephen Gengaro

it's hydrocarbons big on on the you sort to now. U.S. at just when bad carbon. next do your of evolves look big picture thoughts curious, fronts? mean, we from are, think say? from mean generation, importance all you those hear are perspective, decade, I of could a what electricity right renewables? of But nuclear relative over Just bad we any the How necessary a but And picture I perspective, thoughts obviously, share other it kind low how

Daniel Poneman

question. a And great and it's interesting relationship. an Well, it's relationship evolving an it's

XX% electricity and years, And industry whole the have decades it obviously So recent provided more overall for has about United look, of other obviously, mainly contribute if slowed has of decline XX%. natural in X/X have to, you XX% squeezed wind the really coal even and XX% the gas the think, the nuclear, States. and rise look natural though nuclear, been the hydro on secular from coal from I about About came the mix. historically, really solar additions The to from coming gas X/X strong. continues of now coal capacity down of down, about in and

worked all to in the which capacity the factors Why? up same are excess of as Because as very even wind just hard build get factors not XX%. at ballpark and solar their nuclear, in capacity industry has

] that strong And figure, relates as power So nuclear of which comes other carbon-free of more question. even has the though capacity half the the of your XX% the way, shrunk [ by of part segment, because installed overall it makes. share from X/XX country the that held the basically to contribution than has

and solar we to optimize because, to a, this are extensively. and literature, So up Wind as they contributions to. been have -- written you analytical precisely their wind dispatchable and -- In there's which has the power firm intermittent. maximize need point could a to it

sun when shining. get is a You not solar the don't

when get we're or the And about days, power about by not not a way, blowing. seasonal even right? is X don't You not X you're shifts, wind of bridging maybe couple wind hours talking talking or the

a frankly. the lot in there do required significant the who that of capacity so of possibility words, of nuclear point, talking price need batteries, terms the to is just that there power, firm way have And in are but yet dispatchable batteries other power, only been and that's carbon-free level backstop the because you and people quite not are about to of

the that get battery job want the I way, need, and to that renewables and would So have literature, and minutes all find of to you academic to XX weeks substitute you actually in think, only done try X batteries in if X some you'll we storage, nation. collectively

have grid the are the while need day of that developed power, itself nuclear storage a heat reactor been for ability they not and by complement basically So if hours up backstop have TerraPower, can actually that ] and that good salt, salt a you're into And to are those deployment of more Natrium you energy way, form to they they the running that X/XX a about that is renewables. seeing. being does the the leaning very people an trend of by reading is that's [ can that renewables,

indispensable power growing very forth sector, the of again, So or get bottom how to everyone don't to an seeing the course, recognition Intergovernmental whether that has a goal effort net think really the the line and play zero role is And Energy a of International what to Panel mean President scientists I Agency expansion the to generation you to net ask on analysts XXXX. renewables be and trying trend need long-winded. set nuclear nuclear all by in too the to of energy. significant decarbonize is XXXX is Change, get the decarbonize all as the But zero, secular power ambitious to a you overall to at complement I by agree Climate you're as that to

Operator

next line Our comes with question Joseph ROTH from Partners. the Capital of Reagor

Joseph Reagor

treatment settlement. onetime the Question on accounting for this

So the noncash statement revenue, you cash trying it as like I'm was it if flowed understand, through flow as but it to treat guys it item. just seems a

a give exactly have So cash? actually ever how to us as worked to noncash -- physically Or it item? apply you exactly. just just you any that is work? it additional it or can the commentary how did get you Or did to Did guys that is pension

Philip Strawbridge

benefits. here. was that settlement, for in it was way post-retirement was and structured the jump it I'll Joe, pension the Yes, specifically The

we that directly. had to said government the so And those apply

we it straight the into but turned around plan. put -- we get it cash, the pension and So is did

but is you postretirement line trust the bottom a set So that's -- cash. piece, and we that see plan then the don't really the for up why

of look you a So can noncash at as it event. type

said, perspective, we're positive, -- a additional associated money in. right, pension paying ultimately because if about That is down of this it's means plan, have which from have cash into you we'd reduce it to think We're with ] the would assets, putting amount put [ going we the long-term that those. to the right,

long-term exactly your that cash [ right, positive, the ]. So it's answer a Did but question, Joe? doesn't you're

Operator

closing [Operator call the questions management for in no the to back I'd further are like Instructions] to There queue. remarks. hand

Dan Leistikow

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

As to look online our speaking and those and to in, we thanks our again who want you extend you. always, quarter. called with listeners to we forward Thank next

Operator

Ladies this conclude Thank does for and teleconference. you participation. gentlemen, today's your

You may disconnect have and your day. at lines wonderful a time, this

Centrus Energy (LEU) 11 Nov 212021 Q3 Earnings call transcript