Q3 2020 Centrus Energy Corp Earnings Call

November 13, 2020

[music].

Greetings and welcome to the Centrus energy third quarter 2020 earnings call. At this time all participants are in the listen only mode of question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host Mr., Dan Leistikow, Vice President corporate communications per Centrus energy. Thank you you may begin.

Good morning, Thank you for joining us today's call will cover the results from the third quarter of 2020 ended September Thirtyth here.

Here today are Dan Palmer, President and Chief Executive Officer soap Strawbridge, Senior Vice President Chief Financial Officer, Chief administrative officer, and Treasurer and IR.

The Dorian controller, and Chief Accounting Officer before.

Before I turn the call over the Dan part of me I'd like to welcome all of our callers because of all those with let's thing to our webcast the.

The little on our website a replay of this call will also be available later this morning on the Centrus website I'd.

I'd like to remind everyone that certain of the information we may discuss on this call today, maybe considered forward looking information that involves risk and uncertainty, including assumptions about the future performance of Centrus. Our actual results may differ materially from those in our forward looking statements additional information.

Formation concerning factors that could cause actual results to materially differ from those in our forward looking statements is contained in our filings with the FCC, including our annual report on form 10-K quarterly reports on form 10-Q.

Finally, the forward looking information provided today is time sensitive and is accurate only as of today November 13th 2020, unless otherwise noted.

This call is the property of Centrus energy any transcription redistribution retransmission or rebroadcast of the call in any form without the expressed written consent of Centrus is strictly prohibited.

Thank you for your participation and I will now turn the call over to Dan part of it.

Thank you Dan I'm thinking of the everyone on the call today.

As we've discussed in previous calls the health and welfare of our employees and their families. It was our Paramount concern.

The pandemic has certainly of course, that's the change the way we do our work in order to protect.

Our to protect our people. Unfortunately, it has not taken away our ability to deliver on our customer orders and we expect to continue making those deliveries as planned in the month and the years ahead.

Indeed centers is fortunate in that the COVID-19 pandemic does not affect our revenue in the way that it does for direct to consumer businesses.

The all of our revenue comes from stable long term contracts with utilities and the U.S. government.

This was another exciting quarter for Centrus, we launched a public offering raising about $25 billion before expenses. We also went out the cash tender offer to purchase up to $60 million in series B senior preferred stock.

I can't go into much of the tail on that because of the tender offer is still open but we are optimistic about what the future holds.

Our long term order book at our low enriched uranium or L., you said, but range remains at about at remains at about $1 billion, which includes about $300 million in deferred revenue.

In terms of financial result, Centrus reported $33.6 million in total revenue and a net loss of $7 million for the third quarter that is a significant variation from last quarter. Unfortunately, but those of you who regularly tune into these quarterly calls know because you've heard me repeated many times the.

The quarter to quarter variations are expected and reflect the timing of when we make deliveries what matters is the annual performance not what happens in any one quarter.

That is why we are pleased that the long term trend in the market remains positive spot prices for enrichment measured in dollars per separate of work units or SWU have increased by almost 50% since bottoming out in August of 2018.

As the price has continued to climb more utilities have gone back into the market to secure their fuel supply for future years. So we expect to have strong selling opportunities moving forward.

Long time listeners to our quarterly calls I've also heard of discuss the Russian suspension agreement.

The trade agreement between teen between the United States and Russia. The places limits on the amount of Russian nuclear fuel that can be important.

As many of you know we faced a significant risk to our largest supply contracts as the U.S. Department of Commerce worked to extend those import limits past the end of this year. When they were scheduled to expire I am pleased to report. The this issue has now been resolved.

Well the import limits have been extended the agreement signed between the two governments on October 5th expressly allocates a portion of the allowable imports to Centrus.

While the exact quantities set aside for Centrus are confidential, we expect that they will give us what we need to achieve the goals at large strategic plan and to continue to serve our customers the.

This has removed the significant source of uncertainty in the market and help to solidify an important source of revenue for us as we go forward.

Turning to our Centrus technical solutions segment, our incredibly talented team continues making steady progress on the three year 115 million dollar contract we have in place with the U.S. Department of energy under.

Under that contract we are building a cascade of centrifuges that will demonstrate production of a next generation of nuclear fuel called the high assay low enriched uranium for hey, Lou as we call it.

The standard low enriched uranium fuel or L. E U the powers our existing fleet of commercial reactors is enriched to a concentration of the physical isotope you to 35 of a little less than 5% Halo is further richt. So that the you tube 35 concentration is between.

The five and 20%.

The higher concentration of you to 35 in Hailu allows for smaller fuel cores better fuel utilization reduced volumes of waste and the variety of other advantages.

There is growing interest in hailu, both as an upgrade for existing reactors and the fuel a new generation of advanced reactors. The challenge is that Hey, Lou is not commercially available today from western suppliers, which makes it hard for U.S. advanced reactor developers to Mark.

Their new designs to perspective customers.

With the help of our contract with the U.S. Department of energy Centrus is working to solve that problem for the industry.

We intend to be the first to market with commercial Halo production under license by the U.S. Nuclear regulatory Commission and we're well on our way because.

Construction activities are on track on schedule and on budget.

While we have experienced issue with some of our suppliers as the result of the pandemic, we have been able to remain on schedule and on budget for the project of course, we cannot rule out that possibility that the continued effects of Cove. It may change that in the future and as I said at the outset protecting the health and say.

The <unk> of our employees is always our Paramount concern.

That said, we will continue to work with the U.S. department of energy to minimize any impact of the cost or schedule of the program as we move forward.

The demonstration should be completed in early Twentytwenty two and.

And we can then transition to commercial production.

While the fuel requirements of advanced reactor designs vary quite a bit the demonstration cascade will have enough capacity to support one to three small reactors and.

And we can expand in modular fashion as demand for Hailu gross the.

The facility in Piketon, Ohio is large enough to accommodate thousands of centrifuges, if necessary enough to support a fleet of dozens or even the hundreds of reactors. It's a robust market for advanced nuclear energy develops as part of our efforts to assure the resilience and security of the electric grid upon.

The which we all depend so every facet of our lives as well as our intensified efforts to combat climate change.

In October the Department of Energy announced the two winners of the advanced reactor demonstration program or a R. D P.

We are proud to report that we have strong relations with both winners Terrapower and ex energy.

We have been working with ex energy since August 2017, and just two months ago, We announced a collaboration with Terra power to work together to establish commercial scale domestic production capabilities for hailu to support their innovative new reactor.

We also signed a memorandum of understanding with terrestrial energy to secure fuel supply for a future fleet of integral molten salt reactor power plants. Together. These announcements suggest a lot of exciting things that are coming for advanced reactors and the next generation fuels needed to per.

All of them and of course, we're continuing to work on developing other opportunities to promote advanced reactors generating carbon free power for all.

Centrus is uniquely positioned with the only deployment ready U.S. enrichment technology that is suitable for national security missions.

Under the longstanding U.S. policy and binding non proliferation treaty the use of foreign origin, the uranium or force enrichment technologies for National security purposes is prohibited which means that an American technology like the one that we have developed will ultimately be needed to meet America's long term national security require.

The ones for enriched uranium.

Those requirements are currently met from the existing stockpile of highly enriched uranium left over from the Cold War, but the United States Department of Energy has said that a new domestic enrichment capability eventually will be required for missions like maintaining the tritium supplies needed to support our nuclear detour.

And and fueling our nuclear Navy Centrus stands ready to meet those requirements when the need arises and now for more details on the quarterly financial results I will turn the call over at the Philip.

Thank you Dan and good morning, everyone.

As Dan mentioned for the third quarter 2020, we had total revenue of 33.6 million.

Revenue from the L. use segment declined 69.1 million for the third quarter compared to the same quarter last year.

This decline was because we had no suite of deliveries in the quarter, but we did have some uranium sales.

The variability from quarter to quarter rises because our customers in the L. you segment generally have multi year contracts with purchase obligations that are annual net quarterly.

Of the customer decides what month the take their annual purchase covet.

Some quarters look worse, because we have fewer deliveries of all others look better because we have more deliveries other source of variation of the fact that some contracts were signed when prices are higher than the are today and others were signed when prices are lower so.

So the quarter can look better or worse I think one of the price points of the particular contracts that were delivering on during the quarter.

We anticipate that the revenue in the fourth quarter of this year from the L. you segment will be the highest of any quarter for 2020, something there are no interruptions to our planned custom deliveries based on changes in the market or a cold at night.

Cost of sales from.

The yelling you segment decreased 34.8 million in the third quarter 2020 compared to the same period in 2019 again.

Due to no deliveries being made of that core.

Our technical solutions segment revenue and cost of sales decreased by $2 million and was flat respectively compared to the same quarter in 2019. This.

This reflects the mix of technical solutions work performed in each of the periods and pointing work, while none of the Halo of contract that Dan talked about.

Sure.

Now I'd like to talk about our SGN egg costs. This quarter, our total energy in a creed decreased by $2 million compared to the same quarter last year as we reduced our consulting costs by about 1.3 million and our compensation expense by 800000.

We continue to look at opportunities to reduce as you know as we have over the last several years.

As far as cash we ended the third quarter of 2020 with the strong consolidated cash balance of $152.8 million.

Again, it's the end before operating results from cash flows vary from quarter to quarter now I'll turn the call back over to Dan.

Thank you.

Before we close I would like to add just a few thoughts on the future of advanced nuclear reactors as I mentioned earlier, the U.S. Department of Energy recently announced the two major demonstration awards for the advanced reactor demonstration program, which will fund the deployment of two first of the kind advanced reactors in the next five to seven.

Years laying the groundwork for the potential commercialization of those reactor designs. This program reflects the strong commitment of the U.S. Department of energy and the bipartisan coalition in Congress to the future of the advanced nuclear industry and the belief that America can and should lead the transition to the next generation of react.

Yes.

Many of these new designs will require hailu, including both winners of the eight are the P. demonstration awards and Centrus is proud to be on the vanguard of that effort.

In addition, there are now two separate efforts underway at the U.S. Department of defense to explore the potential of micro reactors to support our national security requirements at home and abroad. One of those efforts known as project Palay aims to feel the prototype halo fueled micro reactor within three years.

There's also an effort underway led by the Air force to explore using micro reactors, which are reactors of like one to 10 megawatts instead of a larger size to provide an assured source of power to military bases, if either or both of these efforts go forward the requirement for domestically produced.

Sales of could be significant and we will be ready to meet that need.

This is a pivotal moment for America's nuclear future, our energy security National Security and climate objectives can all be powerfully advanced by the successful deployment of the Banff generation nuclear reactors [noise] all of US at Centrus are excited to be part of this moment and to the it's great.

Venture that hold so much promise for our generation and for those the follow and with that operator, we would be happy to entertain any questions.

Thank you at this time of the conducting a question and answer session. If you would like to ask the question. Please press star one on your telephone keypad a confirmation total indicate your line is in the question can you.

You mean from start to every day to remove your question from the Q.

The participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Our first question comes from the line.

Rob Brown with Lake Street Capital markets. Please proceed with your question.

One of <unk>.

Well Rob.

Good morning.

First question is on the advanced reactor of projects stuff that you. The you mentioned <unk>.

[laughter] give us a sense of of how much of it and you said how much haley of capacity you'd have as the as those ramp and how you sort of envision those are coming.

Coming on line and.

Having feeling capacity to supply them.

Maybe a sense of how sure the though.

Yeah, certainly so of the.

Reactor designs and they're all proprietary of course, Rob.

Vary a lot and some of them require quite modest amounts of halo and some of the required quite substantial amounts of.

The.

Demmons.

If we went beyond the demonstration cascade to billing say of full Cascade of 120 machines that would give us about five or six metric tons per year of of Hailu ER and if we just had just the 16 machines, it's about 900 kg or nearly one a M you per year.

And how how far that would go again just depends on the particular designs.

We could with even the demonstration cascade, we could supply.

Two or three of the smaller versions of but for the larger versions. We we would want to build out additional capacity of the good news about the way. The thing is set up Rob is that it's faster to build and enrichment cascade than it is to build the reactor. So we're going to have plenty of runway to see you know if we get the fidelity in the the math.

The signal and it turns out that some of the larger reactors that need more hey, Lou are going to be built a we have plenty of time to build the machines and time to satisfy whatever demand develops again, one of the nice things about our current business model of compared to the for those who were paying attention years ago.

To the American Centrifuge project, which was anticipating a massive three millions through facility in one move that now were looking not at a massive of plant with all of the feeding withdrawal consolidated and so forth, but one in which we can meter in the investment and meet or the.

The production of our machines to match the demand signal as it emerges.

Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question. Kim. Please press star one on your telephone keypad, the pause a moment to allow for more questions.

Thank you. Our next question comes from the line of Richard Howard with boiling point Research. Please proceed with your question.

Good morning.

On the heading back to the base business as it exists now.

Dan do you have a feeling that the underfeeding of centrifuges.

Worldwide is gradually ending with the current price situation or do you think that is continuing.

Oh, good to hear your rich thanks for the question so among the things that the.

People the whole close in this industry is exactly how much underfeeding, they're doing a but I the way I think the way to think about it is that gradually.

The end of it is the gradual process, the overhang of excess and the cash or capacity in the market is gradually easing of.

And therefore, it was basically you know for those who don't follow it closely.

Underfeeding is what happens when a there.

There's a lot more supply of enrichment capability. The there is demand for separate of work and so sense people like to keep those machines running for you kind of sufficient see an operational reasons. They turn the from enriching fresh uranium.

The the basically re enriching tales of creating effectively a new uranium of mine and so when the depleted tails are the and restore it to a 0.7% concentration of you to 35, they have affected effectively created a bunch more natural uranium which has a waiting effect.

The depresses the market. So I don't know because again the producers we are not operating as you well know rich now so we aren't.

Doing that now a in the operational sense ER and ER, we don't have a confidential information than what our competitors are doing but because of the natural tendency would be for that underfeeding to ease overtime, but I think it's quite a gradual process and my hope.

Yes, it will be you know some period of time before that's worked through.

Thank you once again, ladies and gentlemen to join the question queue. Please press star one at this time well pause a moment.

Thank you ladies and gentlemen, this concludes our question and answer session I'll turn the floor back.

Mr. Leistikow for any final comments.

Thank you operator this will conclude on the Centrus. This third quarter 2020, investor call I want to thank all of our listeners online and those who called in we look forward to speaking with you again next quarter.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

[music].

Greetings and welcome to the Centrus energy third quarter 2020 earnings call.

This time all participants are in a listen only mode of question and answer session will follow the formal presentation if.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad as.

As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host Mr., Dan likes the go Vice President Corporate Communications for Centrus energy. Thank you you may begin.

Good morning, Thank you for joining us today, it's called the cover the results for the third quarter of 2020 ended September Thirtyth here.

Here today are Dan Parliament, President and Chief Executive Officer soap Strobridge, Senior Vice President Chief Financial Officer, Chief administrative officer, and Treasurer and IR.

On the Orient controller, and Chief Accounting Officer before.

Before I turn the call over to Dan part of the I'd like to walk from all about of course because of all of those with listening to our webcast the.

The conference call follows the earnings news release issued yesterday, we expect the file our quarterly report on form 10-Q later today all of our news releases unless you see filings, including our 10-K 10-Q's eight Ks are available on our website. A replay of this call will also be available later this morning on the Centrus website.

I'd like to remind everyone that certain of the information we may discuss one of its called today, maybe considered forward looking information that involves risk and uncertainty, including assumptions about the future performance of Centrus. Our actual results may differ materially from those in our forward looking statements the.

Additional information concerning factors that could cause actual results to materially differ from those in our forward looking statements is contained in our filings with the FCC, including our annual report on form 10-K, and quarterly reports on form 10-Q.

Finally, the forward looking information provided today is time sensitive and is accurate only as of today November 13th 2020, unless otherwise noted.

Thank you for your participation and I will now turn the call over to day in Parliament.

Thank you Dan and thanks, everyone on the call today.

As we've discussed in previous calls the health and welfare of our employees and their families is our Paramount concern.

The pandemic has certainly of course, that's the change the way we do our work in order to protect our to protect our people. Unfortunately, it has not taken away our ability to deliver on our customer orders and we expect to continue making the though deliveries as planned in the month of the years ahead.

Indeed centers is fortunate in that the COVID-19 pandemic does not affect our revenue in the way that it does for direct to consumer businesses.

The all of our revenue comes from stable long term contracts with utilities and the U.S. government the.

I can't go into much of the tail of that because of the tender offer is still open but we are optimistic about what the future holds.

Our long term order book in our low enriched uranium or L., you said what range remains at about assets remained at about $1 billion, which includes about $300 million in deferred revenue.

The quarter to quarter variations are expected and reflect the timing of when we make deliveries what matters is the annual performance not what happens in any one quarter.

That is why we are pleased the the long term trend in the market remains positive spot prices for enrichment measured in dollars per separate of work units or SWU have increased by almost 50% since bottoming out in August of 2018.

As the price has continued to climb more utilities have gone back into the market to secure their fuel supply for future years. So we expect to have strong selling opportunities moving forward.

The long time listeners to our quarterly calls I've also heard us discuss the Russian suspension agreement.

The trade agreement between the team between the United States, and Russia that places limits on the amount of Russian nuclear fuel that can be important.

As many of you know we faced a significant risk to our largest supply contracts of the U.S. Department of Commerce worked to extend those import limits past the end of this year. When they were scheduled to expire I am pleased to report. The this issue has now been resolved.

Well the import limits have been extended the agreement signed between the two governments on October 5th expressly allocate a portion of the allowable imports to centrus.

While the exact quantities set aside for Centrus are confidential, we expect that they will give us what we need to achieve the goals at large strategic plan and to continue to serve our customers.

This has removed the significant source of uncertainty in the market and help to solidify and important source of revenue for us as we go forward.

Under that contract we are building a cascade of centrifuges that will demonstrate production of a next generation of nuclear fuel called the high assay low enriched uranium or hey, Lou as we call it.

The five and 20%.

The higher concentration of you to 35 in Hailu allows for smaller fuel course, better fuel utilization reduced volumes of waste and a variety of other advantages.

Their new designs to perspective customers.

With the help of our contract with the U.S. Department of energy Centrus is working to solve that problem for the industry. We.

We intend to be the first to market with commercial Halo production under license by the U.S. Nuclear regulatory Commission and we're well on our way because.

Construction activities are on track on schedule and on budget.

The of our employees is always our Paramount concern.

That said, we will continue to work with the U.S. Department of energy the minimize any impact of the cost or schedule of the program as we move forward.

The demonstration should be completed in early 2022 and.

And we can then transition to commercial production.

Well the fuel requirements of advanced reactor designs vary quite a bit the demonstration cascade will have enough capacity to support one to three small reactors and.

And we can expand in modular fashion as demand for Halo gross the.

The which we all the pen so every facet of our lives as well as our intensified efforts to combat climate change.

In October the Department of Energy announced the two winners of the advanced reactor demonstration program or a or B P.

We are proud to report that we have strong relationships with both the winners Terrapower an ex energy.

We have been working with ex energy since August 2017, and just two months ago, We announced a collaboration with Terrapower to work together to establish commercial scale domestic production capabilities for hey, Lou to support their innovative new reactor.

We also signed a memorandum of understanding with terrestrial energy to secure fuel supply for a future fleet of integral molten salt reactor Powerplays together. These announcements suggest a lot of exciting things that are coming for advanced reactors and the next generation fuels needed to per.

All of them and of course, we're continuing to work on developing other opportunities to promote advanced reactors generating carbon free power for all.

Centrus is uniquely positioned with the only deployment ready U.S. enrichment technology that is suitable for national security missions.

Under longstanding U.S. policy and binding non proliferation treaty the use of foreign origin, the uranium or foreign enrichment technologies for National security purposes is prohibited which means that an American technology like the one that we have developed will ultimately be needed to meet America's long term national security require.

The ones for enriched uranium.

And and the fueling our nuclear Navy Centrus stands ready to meet those requirements when the need arises and now for more details on the quarterly financial results I will turn the call over the Philip.

Thank you Dan and good morning, everyone.

As Dan mentioned from the third quarter 2020, we the total revenue of 33.6 million.

Revenue from the L. use segment declined $69.1 million for the third quarter compared to the same quarter last year.

This decline was because we had no suite of deliveries in the quarter, but we did have some uranium sales.

The variability from quarter to quarter rises because our customers in the L. you segment generally have multi year contracts with purchase of publications that are annual non accordingly.

So the customer decides what month to take their annual purchase commitment.

Some quarters look worse, because we have fewer deliveries of all others look better because we have more levers other source of variation of the fact that some contracts were signed when prices are higher than the are today and others were signed when prices are lower so.

So quarter can look better or worse, I think one of the price points of the particular contracts that were delivering on during the quarter.

We anticipate that the revenue in the fourth quarter of this year from the L. you segment will be the highest of any quarter per 2020 something.

And there are no interruptions to our planned custom deliveries based on changes in the market or co. The night.

Cost of sales.

The yelling of segment decreased $34.8 million in the third quarter 2020 compared to the same period in 2019 again.

Due to no deliveries being made of that core.

Our technical solutions segment revenue and cost of sales decreased by $2 million and was flat respectively compared to the same quarter in 2019 net.

This reflects the mix of technical solutions work performed in each of the periods and pointing more form under the halo of contract that Dan talked about.

Sure.

Now I'd like to talk about our history in a cost this quarter, our total energy in a creed decreased by 2 million compared to the same quarter last year as we reduced our consulting costs by about $1.3 million in our compensation expense by 800000.

We continue to look at opportunities to reduce as you know as we have over the last several years.

As far as cash we ended the third quarter of 2020 with the strong consolidated cash balance of $152.8 million.

Again, the same before operating results from cash flow is very important quarter now I'll turn the call back over to Dan.

Thanks Philip.

Before we close I would like to add just a few thoughts on the future of advanced nuclear reactors as I mentioned earlier, the U.S. Department of Energy recently announced the two major demonstration awards for the advanced reactor demonstration program, which will fund the deployment of two first of a kind of advanced reactors in the next five to seven.

Years laying the groundwork for the potential commercialization of those reactor designs. This program reflects the strong commitment of the U.S. Department of energy and the bi partisan coalition in Congress to the future of the advanced nuclear industry and the belief that America can and should lead the transition to the next generation of react.

Yes.

Many of these new designs will require hailu, including both winners of the eight are the P. demonstration awards and Centrus is proud to be on the vanguard of that effort.

In addition, there are now two separate efforts underway at the US Department of defense to explore the potential of micro reactors to support our national security requirements at home and abroad. One of those efforts known as project Palay aims to feel the prototype halo fueled micro reactor within three years.

Sales could be significant and we will be ready to meet that need.

This is a pivotal moment for America's nuclear future, our energy security National Security and climate objectives can all be powerfully advanced by the successful deployment of the Banff generation nuclear reactors all of US at Centrus are excited to be part of this moment and the that's great.

Venture that hold so much promise for our generation and for those the follow and with that operator, we would be happy to entertain any questions.

Thank you at this time of the conducting the question answer session. If you would like to ask the question. Please press star one on your telephone keypad a confirmation total indicate your line is in the question queue.

You mean from start to every day to remove your question from the Q.

The participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Our first question comes from the line.

Rob Brown with Lake Street Capital markets. Please proceed with your question.

Good day, good morning, Todd.

Well Rob.

Good morning per square.

First question is on the advanced reactor of projects that you that you mentioned.

The give us a sense of of how much you said, how much halo of capacity you'd have as the as those ramp and how you sort of envision those.

Coming on line and you, having feeling capacity to supply them.

Maybe a sense of how sure kind of plays out.

Yeah, certainly so.

The.

Reactor designs and they're all proprietary of course, Rob.

Vary a lot and some of them require quite modest amounts of halo and sell of the required quite substantial amounts of.

The.

Demmons it.

If we went beyond the demonstration cascade to billing say of full Cascade of 120 machines that would give us about five or six metric tons per year of of Halo.

And if we just had just the 16 machines, it's about 900 kg or nearly one.

Empty you per year, and how how far that would go again just depends on the particular designs, we could with even the demonstration cascade we could supply.

Two or three of the smaller versions of but for the larger versions. We we would want to build out additional capacity of the good news about the way. The thing is set up Rob is that it faster to build and enrichment cascade benefits of the reactor. So we're going to have plenty of runway to see if we get the fidelity in the day.

Dan signal and it turns out that some of the larger of reactors that need more hey, Lou are going to be built we have plenty of time to build the machines and time to satisfy whatever demand develops again, one of the nice things about our current business model of compared to the for those who were paying attention years ago.

To the American Centrifuge project, which was anticipating a mass of a 3 million suite of facility in one move the now were looking not at a massive of plant with all of the feeding withdrawal consolidated and so forth, but one in which we can meter in the investment and meet or the.

The production of our machines to match the demand signal as of the mergers.

Thank you.

Ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.

The moment to allow for more questions.

Thank you. Our next question comes from the line of Richard Howard Boiling point Mr. Please.

Please proceed with your question.

Good morning.

Heading back to the base business as it exists now.

Dan do you have a feeling that the underfeeding of.

Centrifuges World.

Worldwide is gradually ending with the current price situation or do you think that is continuing.

Oh, good to hear your rich thanks for the question so among the things that the peak.

People close in this industry is exactly how much underfeeding, they're doing a but I the way I think the way to think about it is that gradually or the end of it is a gradual process the overhang of excess and the.

Capacity in the market is gradually easing of.

And therefore of basically you know for those who don't follow it closely.

Underfeeding is what happens when.

There's a lot more supply of enrichment capability. The there is demand for separate of work and so sense people like to keep those machines running for you kind of efficient seeing the operational reasons. They turn the from enriching fresh uranium.

The the basically re enriching tales of creating effectively the new uranium of mine and so when the depleted tails are then restore it to a 0.7% concentration of you to 35, they have affected effectively created a bunch more natural uranium which has a waiting effect.

The depresses the market. So I don't know because again the producers we are now operating as you well know rich now so we aren't.

Doing that now a in the operational sense.

And we don't have a confidential information than what our competitors are doing but because of the natural tendency would be for that underfeeding to ease overtime, but I think it's quite a gradual process and my hunch it'll be some period of time before that's worked through.

Thank you once again, ladies and gentlemen to join the question could you. Please press star one at this time well pause a moment.

Thank you ladies and gentlemen, this concludes our question and answer session I'll turn the floor back.

Mr. Leistikow for any final comments.

Thank you operator, this will conclude centrus of third quarter 2020, investor call I want to thank all of our listeners online and those who called in we look forward to speaking with you again next quarter.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Q3 2020 Centrus Energy Corp Earnings Call

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