Q4 2019 Earnings Call
Thank you were standing by and welcome to the Lightbridge Corporation business update fiscal year 2019 talk from school. Please note today's call is being recorded.
It's my pleasure kids shoes.
Not to everybody that's relations for Lightbridge Corporation. Please go ahead.
Thank you Kevin.
All of you for joining us today.
Company's earnings.
It was distributed after market closed yesterday and can be viewed on the investor Relations page of the Lightbridge website at Www Dot L. T Bridge Dot com.
Joining us on the call today is that Gray Chief Executive Officer, along with Larry Goldman Chief Financial Officer, Andre Most Chicago Executive Vice President for nuclear operation.
Jim Malone, Senior Vice President and Chief nuclear fuel development Officer.
Important all vice President for program management, and Barbara cannot Konecranes controller.
I would like to remind our listeners that any statements on this call that are not historical facts are forward looking statement.
Today's presentation includes forward looking statements about the company's competitive position and product and service offerings.
During today's call words, such as like that anticipates believes and then Ken will be used her discussion of gold or events in the future. This presentation is based on current expectations and involve certain risks and uncertainties that may cause actual results to differ significantly from such estimates.
These and other risks are set forth in more detail in Lightbridges filings with the Securities Exchange Commission Lightbridge does not assume any obligation to update or revise any such forward looking statements, whether as a result of new developments or otherwise with that I'd like turn the call over to our first speaker Gray for.
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Thank you Matt.
Thank you all for joining us this afternoon.
Before we begin.
I wanted to let our listeners know that we'd been advised by our legal counsel not to discuss any matters relating to framatome or our joint venture incision on today's call in light of our ongoing arbitration proceedings.
However, we will continue to provide updates as they become available in our FCC filings in accordance with regulation full disclosure.
We ended fiscal year 2019 at a high note.
I used to enter a new phase of our company's development without first funding award from the U.S. Department of energy Deo eat a voucher from D.O. East Gateway for accelerated innovation in nuclear or gain program to support development of Lightbridge fuel in collaboration with Idaho National Laboratory.
The scope of the project includes experiment to design for irradiation of Lightbridge metallic fuel material samples in the advanced test reactor at Idaho National Laboratory.
The project is anticipated to commence in the first half of Twentytwenty. We've discovered that the federal government has made nuclear a truly bipartisan issue, we believe that demonstrating excellent performance under the gain Boucher will be helpful for our future grant applications.
Based on our contract with Idaho National Laboratory and others. At this time, we do not foresee issues relating to covert 19, corona virus slowing or postponing the work relating to the gain Boucher <unk>.
Silver these at Idaho National Lab are spread out over about 900 square miles. So it's a relatively easy place for people to stay apart.
People, who need to work on computers in offices, we hope can work at home.
We also released a video in late December demonstrating Lightbridges co extrusion manufacturing process using surrogate materials for the production of full commercial lines Lightbridge fuel rods for large light water reactors and small modular reactors.
The surrogate materials in the demonstration were selected to demonstrate the flow stresses temperatures and extrusion pressures expected in the manufacture of actual lightbridge fuel rods, which utilize a uranium zirconium alloy.
It is our goal to bring lightbridge fuel to market as quickly and at the lowest cost to stockholders as practical.
We are designing or fuel to make existing reactors able to compete and win financially against natural gas and renewables and other nuclear fuels.
Lightbridge fuel was also compatible with the intent further improve the economics of new smaller safer reactor designs that will significantly increase the amount of carbon free energy.
We're dedicating twentytwenty towards a focused execution of near term milestones in a timely and cost efficient manner.
Our team will continue to communicate with government officials laboratory personnel and others to learn how actions to prevent the spread of covert 19 are affecting their plans and could relate to our work.
We are actively reviewing opportunities and strategies to advance development of our fuel and protect our shareholders' interests.
Everyone at our company could work from home.
We are prioritizing everyone's safety.
For example, we do not have a conference room for this call center, all calling in separately.
We expect the plans we are setting forth for the company to be achievable, even during this turbulent period.
I will talk in more detail about these plants in a moment as well as other meaningful developments for the company first let me turn the call over to Andrey Mushakov, our executive VP for nuclear operations, who will review, our near term research and development opportunities Andre.
Thank you so sure as Seth mentioned, we demonstrated the cards through are going to affect you in process using circuit materials, what 12 foot commercial lines fuel rods large like what's the reactors as well at six withdraws from small modular reactors.
Circuit materials said design simulated the close dresses temperatures and extrusion pressures expected them to manufacture the lightbridge fuel rods utilizing the Iranians are calling them.
We can't began exploring potential opportunities in the can do fuel market and the reactor is a French rice heavy what the reactors, which have online refueling, making at last year to escape from a technical standpoint for our lead test drawdown of samples and they reactors.
I mean, one lender fueling that's drugs or this december its without fuel rods and been spirit and remote without having to shutdown to react.
No I currently quoted mining Candu reactors migration in the world is about half located in Canada.
Well, there and the earliest stages. So we're really come this opportunity to.
We are optimistic or the potential economic benefits for white and significant cost savings.
And the war improve plastic amongst the can be utilities.
Particularly in Canada utilities have taken steps to ensure dish and extend the lines it can be plans.
So.
Thank you Andrea.
I want to discuss recent developments in terms of government support at both federal and state levels.
I'm happy to say that weren't perhaps the friendliest environment for nuclear research in several generations.
The U.S. government is making historically large levels of funding and use of National laboratory facilities available to the American private sector to develop advanced nuclear technology.
As part of its broader support for development of advanced nuclear technology. The U.S. government has recently made these reactors available to the industry, which includes our first to gain Boucher Award.
Then in December Congress voted to approve appropriations for fiscal year Twentytwenty that included $1.49 billion for nuclear energy programs and increase of approximately $167 million over 29 team.
We believe the timing couldn't be better for Lightbridge to benefit from this historic bipartisan support for nuclear energy from the federal government.
In addition to bipartisan support for nuclear power at the federal level, Virginia, Our home state as an example of the same support at the state level. They're currently for builds on the Governor's desk with the fifth passing the house all related to nuclear energy and the advancement of nuclear energy research.
As a member of the board of directors up the Virginia Nuclear Energy consortium, which has helped support this legislation I think Virginia sees the large and growing federal support for nuclear power, particularly for advanced technologies and wants to help position companies and universities within the state.
To receive that federal support.
The legislation is also part of a trend in other states and countries to recognize nuclear as part of clean energy.
We believe there will be significant growth in nuclear power if the world is to meet energy climate and security needs.
We've designed lightbridge fuel to play a major role in meeting these goals.
Much of the private investment into advanced nuclear technology companies is leveraged with Deo eat funding support.
The new gain voucher helps position lightbridge well for further research and development activities within the U.S. National Laboratory complex, which we intend to help us commercialize lightbridge fuel.
While bringing change to the nuclear power industry is difficult we remain confident in our ability to succeed.
Now I would like to discuss our near term fuel development milestones for Lightbridge fuel over the next 12 to 24 months.
We intend on completing the scope of work relating to our gain voucher award in collaboration with Idaho National Laboratory. In addition, as Andre alluded to earlier, we will evaluate the use of lightbridge fuel in the can do reactor market further we anticipate entering into an agreement to manufacture our new.
Your fuel material samples for test reactor irradiation.
We also intend to break to begin the initial phase of demonstration of our fuel manufacturing technology, not with sorry get materialize, we already have done but with depleted uranium.
I'll now turn the call over to Larry Goldman Our Chief Financial Officer to summarize the Companys financial results for the year.
Hi.
Hey, good afternoon, everyone.
Transformation.
Sure.
Absolutely so.
Thanks for your earnings.
Yesterday.
Our form 10-K that.
[noise] [noise] overnight. This is Robert I'm going to clue right back I do apologize we seem to have a across right.
Okay, just hold on a minute everyone. This is our first time doing a call like thislife with everyone in different locations.
Our balance sheet remains strong with in working capital surplus at December 31st 2019 of $18.1 million.
We ended fiscal year, 2019, with $18 million and cash and cash equivalents compared to 24 point Sixmillion for fiscal 2018.
$6 million net decrease in cash and cash equivalents.
We are reducing our overhead spend for 2020.
We hope to benefit from additional.
Ending and we hope market conditions improve.
But this company will continue to take steps so that R&D keeps going forward.
And then our operating activities for the year ended December 31st 2019 was approximately $6.7 million.
Cash during the year ended December 31st 2019, primarily to founder research and development expenses and general and administrative expenses.
Yes, and investing activities decreased $2 million.
3.8 million in 2019 from 5.8 million in 2018.
This decrease was due primarily to the decrease in capital contributions made to the joint venture and vision.
Cash outflow was partially offset by net proceeds from the sale of approximately $3.8 million I've a common stock for the year ended December 31st 2019.
In support of our long term business and future financing requirements with respect to our fuel development.
He will be seeking new strategic alliances and may obtain cost sharing contributions.
Using additional funding from others in order to help fund our future R&D milestones.
Moving to the commercialization of our fuel.
I'll now turn the call over to Barbecuing Achary, our controller will go over some select PML financial information for fiscal year 2019.
Thank you Larry total corporate and research development expenses amounted to $2.7 million for the year ended December 31st 2019 compared to $3.5 million for the year ended December 31st 2018.
This decrease of <unk> point Eightmillion was due to the decrease in corporate research and development activities supporting the inflation joint venture.
Research and development expenses consist primarily of employee compensation and related fringe benefits and the applicable overhead costs related to the research and development of our fuel.
General and administrative expenses for the year ended December 31st 2019, or $5.7 billion compared to 6.7 million prior here.
This decrease of approximately 1 million, which due to a decrease in stock based compensation of approximately $1 million.
Decreasing professional piece approximately <unk> point $2 million.
Which was due to a decrease in legal fees accounting fees and other professional fees.
These decreases were offset by increased employee compensation and employee benefits of approximately <unk> point 2 million due to an increase of a number of employees.
Total stock based compensation included in general and administrative expenses was approximately 24 million and 1.4 million three years and ended December 31st 29, and I'm 2018, respectively.
Other operating expenses were 2.6 million for the year ended December 31st 2019, compared to the 4.8 million for 2018, a decrease of 2.2 million.
The equity in loss from the occasion joint venture decreased by 2.5 million in 2019.
Due to the decrease if research and development activities and the joint venture.
Other income from research and development support provided utilization decreased 5.3 million also due to the decrease of research and development activities in an occasion and Tony banking.
Net loss for the year ended December 31st 2019 was 10.6 million compared to 15.7 million for 2018.
This decrease of 5.1 million was due to decreased research and development expenses.
Chris General and administrative expenses.
The decrease in equity loss from the inflation joint venture.
Now on the CISA.
Thank you Barbara.
Before we get your submitted questions I want to take this time to thank our stakeholders, including our employees vendors and our shareholders for your continued support we're certainly not satisfied with where our stock prices today.
We have taken measures both internally and directly with the investment community that we will that we believe will help deliver long term sustainable value to our shareholders.
We've discussed important business milestones that we intend on delivering upon in order to commercialize our fuel and take advantage of the opportunities before us and the nuclear industry.
The nuclear power industry as it is at an inflection point.
Additional large reactors will close and we believe not enough new ones, where we will be built to take their place in the U.S. and abroad Lightbridge fuel can help the remaining and new large reactors compete against natural gas and renewables. Furthermore, the development of new smaller safer.
Reactors, which our fuel can further optimized opens the door for the next generation of reliable nuclear power.
The Lightbridge leadership team is dedicated to creating long term shareholder value and we remain focused on our pursuit of full scale commercialization of lightbridge fuel as quickly as possible.
Thank you for your support a belief in our vision to capitalize on the opportunity before us in the nuclear industry and with that will now go to the question answer session. Thank you to everyone for submitting your questions ahead of today's call.
Thank you sat there and again, thank thank you to all the investors who submitted question Oh first question.
Mr., Greg mentioned in previous conference call that Lightbridge expects to start in the coming weeks. Some work on a consult on a consulting project with a nuclear regulatory authority overseas that will bring in some revenue what happened to this.
The seems to be moving forward, we're waiting for the overseas authorities to start work with us.
Thank you. Our next question what is the concrete <unk> of this company is the aim to create shareholder value or is it to get the technology to the market regardless of what it means for shareholders.
Our fiduciary duty as to the stock holders the stock holders have invested in a company focused on bringing lightbridge fuel to market, we believe that bringing the fuelcell market will bring great value to the shareholders.
We know the share price hasn't reflected that value for sometime and we are working to turn that around with our fuel developments.
Thank you. Our next question do you plan to register for additional government grants.
Yeah, Andrea you'll take that one.
Sure. Yeah, we are preparing to begin archers deal you find that work and will be gain Boucher. We believe that demonstrates an excellent performance on the gain Roger will be helpful for our future grant applications.
Okay. Thank you.
Our next question what are you doing to raise awareness and your stock.
Well, we've discussed other initiatives that we're taking within the investment community ultimately we need to achieve the upcoming milestones that we set out.
We're about to begin working with Idaho National Lab.
And what happens there get some attention.
As we achieve the milestones we believe they will be worthy of media attention as our company has received coverage in the past.
Our work fits well with the large and growing federal government support for advanced nuclear technology, which helps call attention in the media to nuclear technology.
Thank you.
Our next question can you give us a timeline on the Idaho project. Once completed then what happened.
And Jim far enough to take that one.
Yes.
In the last several weeks, we've been working with the Idaho National lab on the contract for the game voucher work and we expect to complete the contract into beginning work on the project in the coming weeks.
What's under contract the Lightbridge and I nail team will establish the test plan for the measurement of key thermo physical properties of our fuel materials, both before and after a radiation in the advanced test reactor at all.
I know well then perform a detailed design and establish the safety case for the experiment in the 80 or.
This will include the control parameters, such as thermo hydraulic capacity maximum sample temperature neutral influence and the physical location of the test capsules within the 80 or.
Yeah I'll put it this project will be the complete design and safety case needed for insertion of the experiment into the HCR and the timeline for this effort is 12 months from project initiation.
In parallel with our efforts under the gain voucher, we expect to separately contract with all I know and others for the Halo material and fabrication of the sample coupons for the experiment.
Our goal is to have these sample coupons available for insertion into the eighth youre when its core internal change out maintenance outages complete in mid to late 2021.
The actual experiment insertion is subject to the final duration of the outage the availability of testing positions in the eighth Youre and I know prior commitments for testing.
Once the required burn up is achieved in the age Youre, we would expect to perform the post irradiation irradiation testing of the coupon and I know facility as well.
Thank you.
Our next question what effect will the government that are for atomic energy have on the company and how soon can you begin to see some activity as the result of the government's being more bullish on atomic energy.
As mentioned in the prepared remarks, we're seeing growing pipe partisan support in Congress and within the Trump administration for nuclear power.
Just recently on March this new legislation HR six so nine seven the nuclear energy Research and Development Act was introduced in house of Representatives.
The Bill would authorize critical research development and demonstration programs at the Department of Energys office of nuclear energy.
Lightbridge is formally endorse this legislation with the following quote that is actually on the U.S. House of Representatives website from us.
As read your off their develop quote developing next generation nuclear technologies will help us and meet our energy in climate challenges, which is why we support the legislation proposed by representative Conor Lantana Democratic, Pennsylvania Representative Dad, New House Republic in Washington.
Encouraging development of advanced nuclear fuel and reactor designs. This legislation would reinforce American leadership in a strategic sector unquote.
We expect this legislation to move through Congress and become law later this year.
Thank you. Our next question the and the NRC is supporting handle fuel as the nuclear fuel for the nuclear reactors Lightbridge uses metallic fuel rods, what advantages do they have over halo fuel rod.
Okay. So Jim alone will take this one.
Yeah.
Hey, newer AJ Elie you means uranium enriched by weight per cent to no more than five weight per cent and less than 20% uranium to 35 content.
The NRC doesn't support using any specific fuel the NRC function is to review fueled submitted to them for you.
Some fuel concepts will you halo in the range of 5% to 10%.
Lightbridge is all metal fuel Rod design has superior thermal conductivity compared to other fuel designs lightbridge fuel Rod superior thermal conductivity allows the fuel temperatures to remain below the temperature whether that chemical reaction between the fuel cladding and the steam and the reactor vessel after a loss of coolant actually.
[noise] Lightbridge fuel takes advantage of the superior conductivity to support reactor operations at increased power or for longer operating cycle.
Fuel users perceived value added when they have choice of increased power or longer operating cycles. We know it no other fuel design for the current reactors or the near term small modular reactors that can do that the only other reactor concept that could are the advanced generation four reactors being designed for many years in the future.
Almost all of them, we'll need hey look at the level of enrichment that lightbridge reviews, and some of them we'll need metallization.
The success of Lightbridge is the most likely way to create this near term demand and supply for Halo and mineralization that advance reactors accounting.
We also believe it will be in the strategic interest of the U.S. government have large scale commercial production to pay to which we believe lightbridge fuel will help bring about.
Okay, and let me just saying it quickly or definition on Hailu high assay low enriched uranium is by weight percent enriched more than 5%, but less than 20% of uranium to 35, just Justin technical point there <unk>.
Thank you.
Our next question what actions can lightbridge take in the face of upcoming supply in certain.
Regarding I NLD Downblending hailu.
Okay, Jim for enough to take this one.
Oh, yes so.
Lightbridge has investigated the do we use notice of opportunity for the supply of Downblending hailu material from the baby or two reactor at I know.
And unfortunately, the BR fuel contains radioactive contamination and other residual impurities that make impractical for our current objectives.
However, we have had additional discussions with other areas of the deal we laboratory complex and we believe that sufficient quantities of heyler will be available to support our testing program, but I know as well as for LTAC fabrication in the future.
Thank you and our last question.
What reasonable timelines can investors expect moving forward towards commercialization and what is the lightbridge value proposition to attract new funding investments and maintain or increase company market cap.
Jim Malone take that one okay, we anticipate near term fuel development milestones for Lightbridge fuel over the next 12 to 24 months will consist of the following.
Complete the scope of work related to the recent video Egain vote. Your award in collaboration with the Idaho National Laboratory.
Entered into an agreement to manufacture our nuclear fuel immaterial samples for test reactor irradiation.
Begin initial demonstration of our manufacturing technology, using depleted or natural uranium and perform evaluation of our fuel for use in the Candu reactors Mark.
But long term milestones towards the development and sale of nuclear fuel assemblies include among other things irradiating material samples and or prototype fuel rods and test reactors conducting post irradiation examination of a radiated material sampled and or prototype fuel rods.
Performing thermo hydraulic experiments.
Performing seismic and other out of reactor experiments.
Entering into a lead test Rod Assembly agreement with a host reactor demonstrating the production of lead test rod and or lead test assemblies at a pilot scale fuel fabrication facility and demonstrating the operation of lead test rod and or lead test assemblies in commercial reactors.
There are inherit uncertainties in the cost and outcomes of the many steps needed to support successful deployment of our fuel and commercial nuclear reactors, which makes it difficult to predict the timing of the commercialization of our nuclear fuel technology with any accuracy accordingly.
Based on our anticipated schedule, we expect to begin receiving purchase orders for initial reload batches from utilities, meaning for full commercial fuel sales to power reactors not for any testing or licensing purposes in about eight to 10 years, we will continue to seek development funding contributions or other financing arrangements with utilities and the dips.
Shipment of energy.
Well, thank you Jim and thank you everybody for participating on today's call. We look forward to updating you on our Q1 call. Our lines are always open an IR and LT bridge dotcom stay safe and healthy Goodbye.